In performing a vertical analysis, the base for cost of goods sold is
A) total selling expenses.
B) net sales.
C) total expenses.
D) total revenues.

Question

Quizplus · Accepted Answer

In a vertical analysis, the base for cost of goods sold is always the net sales. This is because cost of goods sold represents the cost of producing the goods that were sold, so it is directly related to the sales revenue generated. Therefore, by using net sales as the base, we can determine what percentage of sales is attributed to the cost of goods sold.

In Performing a Vertical Analysis, the Base for Cost of Goods