A company’s sales in the prior year were $300,000 and in the current year were $351,000. Using the prior year as the base year, the sales trend percent for the current year is
- a. 17%.
- b. 85%.
- c. 100%.
- d. 117%.
- e. 48%.
Determine the sales trend percent for the current year.
Answer to Problem 1MCQ
d. 117%
Explanation of Solution
Trend analysis: Trend analysis is type of horizontal analysis used to calculate the changes in economic cycle of a business for several years in terms of changes in percentage using one of the years as base year. It is computed using the formula:
Thus, sales trend percent for the current year is as follows:
Hence, the sales trend percent for the current year is 117%.
The above calculation is matching with the option d. 117%. Thus, option d. 117% is the correct option.
a. The sales trend for the current year is 17%: it is incorrect option because the sales trend for the current year is 117% not 17%.
b. The sales trend for the current year is 85%: it is incorrect option because sales trend for the current year is 117% not 85%.
c. The sales trend for the current year is 100%: it is incorrect option because the sales trend for the current year is 117% not 100%.
e. The sales trend for the current year is 48%: it is incorrect option because the sales trend for the current year is 117% not 48%.
Thus, the sales trend for the current year is 117%.
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Chapter 17 Solutions
Principles of Financial Accounting.
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