Mother Nature Supplies
Following are selected data from the financial statements of Mother Nature Supplies:

$\begin{array}{lrr}&2018&2017\
\text { Accounts receivable } & \$ 60,000 & \$ 38,000 \
\text { Merchandise inventory } & 12,000 & 16,000 \
\text { Total assets } & 450,000 & 380,000 \
\text { Net sales } & 380,000 & 270,000 \
\text { Cost of goods sold } & 160,000 & 210,000
\end{array}$
-Refer to the data for Mother Nature Supplies.
Which of the following would result from a horizontal analysis of its income statement?
A)Cost of goods sold is 45.5% of net sales for 2018.
B)Gross profit is 42.1% of net sales for 2018.
C)Cost of goods sold decreased $50,000,or 23.8%,during 2018.
D)Accounts receivable total 13.3% of total assets for 2018.

Question

Mother Nature Supplies
Following are selected data from the financial statements of Mother Nature Supplies:
​
 $\begin{array}{lrr}&2018&2017\
\text { Accounts receivable } & \$ 60,000 & \$ 38,000 \
\text { Merchandise inventory } & 12,000 & 16,000 \
\text { Total assets } & 450,000 & 380,000 \
\text { Net sales } & 380,000 & 270,000 \
\text { Cost of goods sold } & 160,000 & 210,000
\end{array}$ ​
-Refer to the data for Mother Nature Supplies.  
Which of the following would result from a horizontal analysis of its income statement?
A)Cost of goods sold is 45.5% of net sales for 2018.
B)Gross profit is 42.1% of net sales for 2018.
C)Cost of goods sold decreased $50,000,or 23.8%,during 2018.
D)Accounts receivable total 13.3% of total assets for 2018.

Quizplus · Accepted Answer

Horizontal analysis involves comparing financial data over two periods to calculate the change in dollar amount and percentage. The cost of goods sold decreased from $210,000 in 2017 to $160,000 in 2018, which is a decrease of $50,000 or 23.8% (calculated as $50,000 / $210,000).

Mother Nature Supplies Following Are Selected Data from the Financial

Mother Nature Supplies
Following Are Selected Data from the Financial