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The Following Is a Summary of Information Presented on the Financial

question 95

Multiple Choice

The following is a summary of information presented on the financial statements of The Cake Company on December 31, 2014.
$\begin{array}{|l|r|c|}\hline \text { Account }&2014&2013\\\hline \text { Current assets } & \$ 65,000 & \$ 50,000 \\\hline \text { Accounts receivable } & 80,000 & 75,000 \\\hline \text { Merchandise inventory } & 50,000 & 40,000 \\\hline \text { Current liabilities } & 75,000 & 50,000 \\\hline \text { Long-term liabilities } & 30,000 & 50,000 \\\hline \text { Common stock } & 50,000 & 40,000 \\\hline \text { Retained earnings } & 40,000 & 25,000\\\hline \\\hline \text { Net sales revenue } & \$ 525,000 & \$ 500,000 \\\hline \text { Cost of goods sold } & 400,000 & 395,000 \\\hline \text { Gross profit } & \$ 125,000 & \$ 105,000 \\\hline \text { Selling and general expenses } & 45,000 & 50,000 \\\hline \text { Net income before income tax expense } & \$ 80,000 & \$ 55,000 \\\hline \text { Income tax expense } & \$ 24,000 & 16,500 \\\hline \text { Net income } & \$ 56,000 & \$ 38,500 \\\hline\end{array}$

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What would horizontal analysis report with respect to net sales revenue?

Definitions:

Nash Equilibrium

Nash Equilibrium is a concept in game theory where each player's strategy is optimal given the strategies of all other players, leading to a situation where no player can benefit by changing strategies unilaterally.

Profit-Maximizing

A strategy or process by which a firm adjusts its production and pricing to achieve the highest profit possible.

Collude

To come to a secret understanding for a harmful purpose; often refers to competitors agreeing on prices or market shares to gain an advantage.

Annual Fixed Cost

Regular expenses incurred by a business or individual that do not vary with production level or output within a year.