The Galloway Corporation Data for the Current Year -What Would a Horizontal Analysis Report with Respect to Long-Term

question 61

Multiple Choice

The Galloway Corporation data for the current year: $\begin{array}{|l|l|l|}\hline \text { Account } & \text { Current year } & \text { Prior year } \\\hline \text { Current assets } & \$ 46,200 & \$ 42,000 \\\hline \text { A/R } & \$ 69,000 & \$ 60,000 \\\hline \text { Mdse. Inventory } & \$ 67,500 & \$ 50,000 \\\hline \text { Current liabilities } & \$ 46,200 & \$ 33,000 \\\hline \text { Long-term liabilities } & \$ 26,600 & \$ 28,000 \\\hline \text { Common stock (5,000 shares) } & \$ 42,000 & \$ 35,000 \\\hline \text { Retained earnings } & \$ 67,900 & \$ 56,000 \\\hline \text { Net sales revenue } & \$ 625,000 & \$ 500,000 \\\hline \text { COGS } & \$ 520,000 & \$ 400,000 \\\hline \text { Gross Profit } & \$ 105,000 & \$ 100,000 \\\hline \text { Selling/General expenses } & \$ 45,000 & \$ 50,000 \\\hline \text { Net income before taxes } & \$ 60,000 & \$ 50,000 \\\hline \text { Income tax expense } & \$ 16,500 & \$ 15,000 \\\hline \text { Net Income } & \$ 43,500 & \$ 35,000\\\hline\end{array}$



-What would a horizontal analysis report with respect to long-term liabilities?

• A)Long-term liabilities decreased by $1,400.
• B)Long-term liabilities increased by 4.26%.
• C)The current ratio is: 1.00.
• D)The debt ratio is: 39.85%.

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Definitions:

Ancillary Agreements

Additional agreements that are ancillary to a main agreement, providing for supplementary details and obligations not covered in the primary contract.

Employment Contracts

Legal agreements specifying the terms and conditions of employment between an employer and employee.

Indivisible Agreement

A contract or agreement that cannot be separated into individual parts, requiring full performance by the parties involved.

Separate Consideration

The distinct value or compensation given in exchange for a service or agreement, specifically identifiable apart from other considerations.