In performing a vertical analysis the base for sales returns and allowances is
A) sales.
B) sales discounts.
C) net sales.
D) total revenues.

Question

Quizplus · Accepted Answer

The base for sales returns and allowances in a vertical analysis is typically net sales, as this provides a clearer picture of the actual sales revenue after returns and allowances have been deducted. Using sales or total revenues as the base would not account for these deductions and could distort the analysis. Sales discounts are a separate category and would not be included in the base for sales returns and allowances.

In Performing a Vertical Analysis the Base for Sales Returns