The following is a summary of information presented on the financial statements of a company on december 31, 2019. account 2019 2018 net sales revenue $600,000 $504,000 cost of goods sold 456,000 405,000 gross profit $144,000 $99,000 selling expenses 51,000 54,000 net income before income tax expense $93,000 $45,000 income tax expense 39,000 23,000 net income $54,000 $22,000 with respect to net income, a horizontal analysis reveals
a. a 145.45% decrease in net income
b. a $22,000 increase in net income
c. that net income is 14.55% of net sales revenue
d. a 145.45% increase in net income

Option (D) is correct.

Explanation:

Horizontal analysis is a technique used to find a trend in the corresponding figures of the financial year for one or more than one years.

In this question base year will be 2018.

Therefore,

Percentage change:

= [(Net income of 2019 - Net income of 2018) ÷ Net income of 2018] × 100

= [($54,000 - $22,000) ÷  22,000] × 100

= 1.4545 × 100

= 145.45% increase

In Horizontal analysis a year is taken as base year on the basis of which complete analysis will be done.

It is done by calculating percentage change .

answer; work samples;

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