Wellington,Inc A)$287,400
B)$294,500
C)$260,300
D)$296,100

question 143

Multiple Choice

Wellington,Inc.uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ended December 31,2017: $\begin{array}{c}\text {Wellington, Inc.}\\\text {Income Statement}\\\text {December 31, 2017}\\\begin{array}{|l|r|l|}\hline & 2017 & 2016 & \begin{array}{r}\text { Increase } \\\text { (Decrease }\end{array} \\\hline \text { Sales Revenue } & \$ 289,600 & & \\\hline \text { Interest Revenue } & 2,700 & & \\\hline \text { Gain on Sale of Plant Assets } & 6,000 & &\\\hline \text { Total Revenues and Gains } & & \$ 298,300 \\\hline \text { Cost of Goods Sold } & 145,000 & \\\hline \text { Salaries and Wages Expense } & 49,700 & \\\hline \text { Depreciation Expense - Plant Assets } & 16,000& \\\hline \text { Other Operating Expense } & 24,300 & \\\hline \text { Interest Expense } & 3,500 & \\\hline \text { Income Tax Expense } & \text { 7,800 } & \\\hline \text { Total Expenses } & & 246,300 \\\hline \text { Net Income } & & \$ 52,000 \\\hline\end{array}\end{array}$

• A)$287,400
• B)$294,500
• C)$260,300
• D)$296,100

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Definitions:

Horizontal Analyses

Analysis technique for financial statements that evaluates changes in financial information over multiple reporting periods using percentage or absolute comparisons to find growth or decline trends.

Financial Statements

Reports that summarize the financial performance and position of a business, including the balance sheet, income statement, and cash flow statement.

Current Ratio

A measure used to evaluate a company’s liquidity and short-term debt-paying ability; computed by dividing current assets by current liabilities.

Vertical Analysis

A financial statement analysis method where each entry for each category is listed as a percentage of a base figure within the statement.