Question

Selecting a base year and expressing each amount as a percent of the base year amount is called:

Answer 1

The process of selecting a base year and expressing the amount as a percent of the base year amount is referred to as trend analysis. Percentage change can be calculated between two periods or over a longer period of time.

Percentage change between two periods:

Subtract the earlier year from the later year. A negative difference means the change is a decrease. A positive difference means it is an increase. Then divide the change by the earlier year's balance.

Percentage change over a longer period of time:

1.    Select the base year.

2.    Divide the amount in each nonbase year (for each line item) by the amount in the base year and multiply by 100.