Chapter 12, Problem 1DQ

To determine

Determine the percentage change in a financial statement line item calculated.

Explanation of Solution

Financial statement:

Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Percentage change is calculated by dividing dollar change amount by Base period amount and multiplied by 100. Dollar change amount is calculated by taking the difference between the current period amount and Base period amount.

$\text{Percentage change = }\frac{\text{Dollar change }}{\text{Base period amount}}\times 100$