The formula for the percentage change in a financial statement line item is the current year amount:
A)divided by the base year amount.
B)minus the base year amount divided by the base year amount.
C)minus the base year amount divided by current year amount.
D)added to the base year amount divided by the base year amount.

Question

Quizplus · Accepted Answer

The formula for percentage change is: (Current year amount - Base year amount) / Base year amount x 100%.

Option A is incorrect because it would not give the percentage change, but rather the ratio of the current year to the base year.

Option C is incorrect because subtracting the base year amount from the current year amount would give a decrease rather than a percentage change.

Option D is incorrect because adding the base year amount to the current year amount and then dividing by the base year amount would not give a percentage change.

The Formula for the Percentage Change in a Financial Statement