US CMA Part 2 · Chapter 1 · Question 2 of 15
Harlow Supply Co. reported net sales of $840,000 in Year 1 and $966,000 in Year 2. Using horizontal analysis with Year 1 as the base year, what is the percentage change in net sales?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 15.0%
Explanation
Horizontal analysis measures the change from the base year: ($966,000 - $840,000) / $840,000 = $126,000 / $840,000 = 15.0%. Dividing the change by Year 2 sales (13.0%) uses the wrong base, and 115.0% is Year 2 expressed as a percentage of Year 1 rather than the change.
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