The following is a summary of information presented on the financial statements of a company on December 31, 2019. $$\begin{array} { | l | r | r | }
\hline \text { Account } & { \mathbf { 2 0 1 9 } } & { \mathbf { 2 0 1 8 } } \
\hline \text { Net Sales Revenue } & \$ 607,000 & \$ 502,000 \
\hline \text { Cost of Goods Sold } & \underline { 450,000 } & \underline { 406,000 } \
\hline \text { Gross Profit } & 157,000 & 96,000 \
\hline \text { Selling Expenses } & \underline { 54,000 } & \underline { 52,000 } \
\hline \text { Net Income Before Income Tax Expense } & 103,000 & 44,000 \
\hline \text { Income Tax Expense } & \underline { 38,000 } & \underline { 24,000 } \
\hline \text { Net Income } & \$ 65,000 & \$ 20,000 \
\hline
\end{array}$$ With respect to net sales revenue, a horizontal analysis reveals ________.

Question

The following is a summary of information presented on the financial statements of a company on December 31, 2019. $$\begin{array} { | l | r | r | } 
\hline \text { Account } &  { \mathbf { 2 0 1 9 } } &  { \mathbf { 2 0 1 8 } } \
\hline \text { Net Sales Revenue } & \$ 607,000 & \$ 502,000 \
\hline \text { Cost of Goods Sold } & \underline { 450,000 } & \underline { 406,000 } \
\hline \text { Gross Profit } & 157,000 & 96,000 \
\hline \text { Selling Expenses } & \underline { 54,000 } & \underline { 52,000 } \
\hline \text { Net Income Before Income Tax Expense } & 103,000 & 44,000 \
\hline \text { Income Tax Expense } & \underline { 38,000 } & \underline { 24,000 } \
\hline \text { Net Income } & \$ 65,000 & \$ 20,000 \
\hline
\end{array}$$ With respect to net sales revenue, a horizontal analysis reveals ________.

Quizplus · Accepted Answer

Without the actual dollar amounts, we cannot determine if the increase in net sales revenue is positive or negative. However, a horizontal analysis compares the change in an item from one year to the next, expressed as a percentage. Therefore, an increase of 20.92% implies the net sales revenue has increased by approximately one-fifth compared to the previous year.

The Following Is a Summary of Information Presented on the Financial