The Bristol Corporation data for the current year and prior year is as follows: With respect to net income before income tax expense and net income, what would a horizontal analysis report?
A)There was an increase in both net income before income tax expense and net income of 10%.
B)Both net income before income tax expense and net income increased by $6000.
C)The current ratio is 27.76
D)Both net income before tax expense and net income were 11% of net sales revenue.

Question

The Bristol Corporation data for the current year and prior year is as follows:  With respect to net income before income tax expense and net income, what would a horizontal analysis report?
A)There was an increase in both net income before income tax expense and net income of 10%. 
B)Both net income before income tax expense and net income increased by $6000. 
C)The current ratio is 27.76 
D)Both net income before tax expense and net income were 11% of net sales revenue.

Quizplus · Accepted Answer

The question asks about the horizontal analysis of net income before income tax expense and net income. Horizontal analysis compares data from the current year to that of a prior year. The given data only provides information for the current year and prior year, so we can infer that the comparison is between those two years. Therefore, we can calculate the percentage change between the two years for net income before income tax expense and net income. If the percentage change for both is the same, then we can conclude that there was an equal increase or decrease in both. Based on the given data, the percentage change for both net income before income tax expense and net income is not provided, so we cannot select options B, C, or D. Option A is the best choice because it is a possible outcome of a horizontal analysis without contradicting the given data.

The Bristol Corporation Data for the Current Year and Prior