The Following Is Summary of Information Presented on the Financial

question 43

Multiple Choice

The following is summary of information presented on the financial statements of a company on December 31, 2015. $$\begin{array} { | l | r | r | } \hline \text { Account } & { \mathbf { 1 0 1 5 } } & { \mathbf { 2 0 1 4 } } \\\hline \text { Net Sales Revenue } & \$ 600,000 & \$ 500,000 \\\hline \text { Cost of Goods Sold } & \underline { 450,000 } & \underline { 400,000 } \\\hline \text { Gross Profit } & \$ 150,000 & \$ 100,000 \\\hline \text { Selling Expenses } & \underline { 50,000 } & \underline { 50,000 } \\\hline \text { Net income before income taxexpense } & \$ 100,000 & \$ 50,000 \\\hline \text { Income taxexpense } & \underline { 35,000 } & \underline { 18,000 } \\\hline \text { Net Income } & \underline { \$ 65,000 } & \$ 32,000 \\\hline\end{array}$$ What would a horizontal analysis report show with respect to net income?

• A) both net income before income tax expense and net income are 45.45% of net sales revenue
• B) a $25,000 increase in net income
• C) a 45.45% increase in net income
• D) a 103% increase in net income

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Definitions:

Ethical Responsibility

The duty to make decisions and conduct oneself in a way that is fair, honest, and respects the rights and dignity of all stakeholders.

Philanthropic Goodwill

The positive reputation and brand value that an organization gains through its charitable actions and contributions to society.

Market Research

The process of gathering, analyzing, and interpreting information about a market, including potential customers and competitors.

SWOT Analysis

A strategic planning tool that evaluates Strengths, Weaknesses, Opportunities, and Threats of a business or project.