Use the Following Information to Do a Horizontal Analysis of Magic

question 52

Multiple Choice

Use the following information to do a horizontal analysis of Magic Corporation's income statement for the current year and prior year: $$\begin{array} { | l | l | l | l | l | } \hline \text { Accaunt } & \text { Current year } & \text { Priar year } & \text { Dollar Change } & \text { \%6 Change } \\\hline \text { Cost af gaod sold } & \$ 375,000 & \$ 300,000 & & \\\hline \text { Selling/general exp } & \$ 60,000 & \$ 40,000 & & \\\hline \text { Grass profit } & \$ 102,600 & \$ 76,000 & & \\\hline \text { Net incarne } & \$ 17,600 & \$ 22,000 & & \\\hline\end{array}$$
- What is the percentage change in net income?

• A)-20.00%
• B)17.15%
• C)80.00%
• D)35.00%

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Definitions:

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company.

Cash Collections

The total amount of money received by a company from its various activities, including sales, services, and financing, over a specific period.

Cost of Goods Sold

Costs directly associated with manufacturing goods a company sells, such as materials and labor expenses.

Accounts Receivable Balance

The Accounts Receivable Balance is the total amount of money owed to a company by its customers for goods or services delivered on credit.