The Following Is a Summary of Information Presented on the Financial

question 46

Multiple Choice

The following is a summary of information presented on the financial statements of a company on 31 December 2017.
$$\begin{array} { | l | l | l | } \hline \text { Account } & \mathbf { 2 0 1 7 } & \mathbf { 2 0 1 6 } \\\hline \text { Sales revenue } & \$ 603,000 & \$ 500,000 \\\hline \text { Cost of sales } & 454,000 & 401,000 \\\hline \text { Gross profit } & \$ 149,000 & \$ 99,000 \\\hline \text { Selling expenses } & \$ 5,000 & \$ 4,000 \\\hline \text { Profit before income tax } & \$ 94,000 & \$ 45,000 \\\hline \text { Income tax expense } & 39,000 & 19,000 \\\hline \text { Profit } & \$ 55,000 & \$ 26,000 \\\hline\end{array}$$
What would a horizontal analysis report show with respect to Profit?

• A) a 89.66% increase in Profit
• B) a 111.54% increase in Profit
• C) a $26,000 increase in Profit
• D) both Profit before income tax and Profit are 89.66% of Sales revenue

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Definitions:

Negotiating

The process of discussing and arriving at a mutual agreement between parties with differing needs or views.

Initial Opinions

Preliminary judgments or beliefs formed at the beginning of an exploration or discussion, before all information has been presented.

Mediating

The act of intervening between conflicting parties to promote reconciliation, settlement, or understanding.

Modeling

The process of emulating or imitating behaviors, attitudes, or techniques demonstrated by others as a way of learning or teaching.