Question

Question 50 (2 points) When doing vertical analysis of the balance sheet, to get percentages for each balance sheet item, you divide the dollar amount for the particular balance sheet item by the dollar amount of total Liabilities. the dollar amount of total Stockholders' Equity. the dollar amount of total Assets plus total Liabilities plus total Stockholders' Equity. the dollar amount of total Assets OR total Liabilities plus total Stockholders' Equity Submit Quiz 38 of 50 questions saved

Answer 1

First 4 questions are being answered here:

1. Option (d) is correct

In the vertical analysis of the balance sheet, each balance sheet item is reported as a percentage of total assets or total liabilities plus stockholder's equity.

2. Option (d) is correct

Gross profit appears before income from irregular items. When we prepare multiple step income statement, income is divided into various parts in sequential manner as below:

- Gross Profit

- Income from operations

- Income before irregular items

- Income tax

- Income from continuing operations

- Income from discontinued operations

- Net income

3. Option (b) is correct

Loss from discontinued operations are not part of income from continuing operations. They are irregular items and reported separately, net of tax. So, in the income statement, loss from discontinued operations will be:

Loss from discontinued operations = $100000 * (1 - 25%) = $75000

And,

Income before income tax = Income before irregular items + Loss from discontinued operations

Putting the values in the above equation, we get,

$400000 = Income before irregular items + $75000

Income before irregular items = $400000 - $75000 = $325000

4. Answer choices are not given in the question.

5. Option (a) is correct

% in 2014 = Sales in 2014 / Sales in 2012 (i.e. base year) * 100

% in 2014 = $880 / $800 * 100 = 110%