8) For trend analysis to work correctly, the accountant uses the:

A) beginning percentage.

B) base year.

C) common-size statement.

D) horizontal analysis.


9) Which analysis deals with the percentage of changes in certain items over several years?

A) Vertical analysis

B) Ratio analysis

C) Trend analysis

D) Common-size statement

10) The revenue of Carol’s Environmental Services for Years 1, 2, and 3 are $40,000, $60,000 and $80,000, respectively. Year 1 is the base year. The trend percentage for Year 2 is:

A) 50%.

B) 150%.

C) 200%.

D) 133%.


11) The sales of Mary’s Services for Years 1, 2, and 3 are $25,000, $45,000, $60,000, respectively. The trend percentage for Year 3 is:

A) 42%.

B) 240%.

C) 140%.

D) 58%.


12) Net income was $45,000 in Year 1 and $60,000 in Year 2. The percentage increase in net income was:

A) 33.33%.

B) 133.33%.

C) (25%).

D) (33.33).


13) What was the percentage of decrease in the Accounts Receivable account if the receivables were $80,000 in Year 1, and $60,000 in Year 2?

A) (25%)

B) 33.33%

C) (33.33%)

D) 25%

14) In a common-size income statement, selling expenses are 55%. This means that they are 55% of:

A) net income.

B) net sales.

C) gross profit.

D) net profit.


15) If Cara’s Piano sales increased from $40,000 to $60,000 and its cost of goods sold increased from $20,000 to $40,000, then vertical analysis based on sales would show the following for cost of goods sold (rounded to the nearest percent):

A) 40% and 20%.

B) 10% and 30%.

C) 50% and 67%.

D) 67% and 40%.


16) An expression of the amount of each item in a statement shown as a percentage of some designated total for purposes of comparison is called:

A) horizontal analysis.

B) earnings per share analysis.

C) return on total assets.

D) vertical analysis.


17) If current assets were $100,000 in 20×7 and $88,000 in 20×8, what was the amount of increase or decrease? (round to nearest percent):

A) The percentage increase is 13.64%.

B) The percentage decrease is 12%.

C) The percentage decrease is 13.64%.

D) The percentage increase is 12%.



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