During the years 2016 through 2018,Powers,Inc. ,reported the following amounts of net income (dollars in thousands): Relative to the prior year,the percentage change in net income:
A)Was the same in 2017 and 2018.
B)Was larger in 2018 than in 2017.
C)Was smaller in 2018 than in 2017.
D)Cannot be determined without knowing how many shares of stock were outstanding.

Question

During the years 2016 through 2018,Powers,Inc. ,reported the following amounts of net income (dollars in thousands):  Relative to the prior year,the percentage change in net income:
A)Was the same in 2017 and 2018. 
B)Was larger in 2018 than in 2017. 
C)Was smaller in 2018 than in 2017. 
D)Cannot be determined without knowing how many shares of stock were outstanding.

Quizplus · Accepted Answer

To determine the percentage change in net income, we need to compare the net income of each year to the net income of the prior year.

From 2016 to 2017, the net income increased from $500,000 to $600,000, which represents a 20% increase.

From 2017 to 2018, the net income decreased from $600,000 to $400,000, which represents a 33.33% decrease.

Therefore, the percentage change in net income was larger in 2017 than in 2018, and option B is incorrect. Option A is also incorrect because the percentage change was different in each year.

Option D is also incorrect, as the number of shares outstanding should not impact the percentage change in net income.

Therefore, the correct answer is option C, as the percentage change in net income was smaller in 2018 than in 2017.

During the Years 2016 Through 2018,Powers,Inc