Which is generally used as the base amount in performing a vertical analysis of an income statement?
A)Total expenses
B)Net sales
C)Gross sales
D)Gross profit

Question

Quizplus · Accepted Answer

Net sales (also known as revenue) is generally used as the base amount in performing a vertical analysis of an income statement. This allows for a comparison of each expense item and line item to the total revenue, giving an idea of the proportion of each item to the overall income. Choosing any of the other options (total expenses, gross sales, or gross profit) would not provide an accurate representation of the income statement as a whole.

Which Is Generally Used as the Base Amount in Performing