The Following Is Summary of Information Presented on the Financial

question 96

Multiple Choice

The following is summary of information presented on the financial statements of a company on December 31,2017. $\begin{array}{|l|r|r|}\hline \text { Account } & 2017 & 2016 \\\hline \text { Current Assets } & \$ 68,000 & \$ 51,000 \\\hline \text { Accounts Receivable } & 83,000 & 78,00 \\\hline \text { Merchandise Inventory } & 52,000 & 45,000 \\\hline \text { Current Liabilities } & 77,000 & 53,000 \\\hline \text { Long-term Liabilities } & 34,000 & 51,000 \\\hline \text { Common Stock } & 51,000 & 42,000 \\\hline \text { Retained Earnings } & 41,000 & 28,000 \\\hline\\\hline \text { Net Sales Revenue } & \$ 526,000 & \$ 504,000 \\\hline \text { Cost of Goods Sold } & 400,000 & 398,000 \\\hline \text { Gross Profit } & \$ 126,000 & \$ 106,000 \\\hline \text { Selling Expenses } & 50,000 & 51,000 \\\hline \text { Net Income Before Income Tax Expense } & \$ 76,000 & \$ 55,000 \\\hline \text { Income Tax Expense } & 30,000 & \$ 16,900 \\\hline \text { Net Income } & \$ 46,000 & \$ 38,100 \\\hline\end{array}$ With respect to current liabilities,a horizontal analysis reveals ________.(Round your answer to two decimal places. )

• A)that current liabilities are 37.93% of total equity
• B)a 45.28% increase in current liabilities
• C)a current ratio of 0.88
• D)a 31.17% increase in current liabilities

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Definitions:

Ordinary Gain

Ordinary gain refers to the profit that arises from the sale of an asset or property, which is taxable at standard income tax rates.

Receivables

Money owed to a business by its clients or customers for goods or services that have been delivered but not yet paid for.

Artistic Works

Original items or creations, like paintings, music, literature, etc., often protected by copyright law.

Capital Assets

Long-term assets such as property, plant, and equipment that are used or held for investment purposes, the sale of which results in capital gains or losses.