Question

Which income statement line item had the largest percentage increase from the prior year to the current year? Current Year Prior Year Sales $120,000 $100,000 Cost of Goods Sold 80,000 60,000 Depreciation Expense 30,000 20,000 Interest Expense 2,000 5,000

Answer 1

Answer:

the depreciation expense increased by 50% during the current year.

Explanation:

                                                   Current Year      Prior Year       % change

Sales                                              $120,000        $100,000          +20%

Cost of Goods Sold                       $80,000          $60,000          +33.33%

Depreciation Expense                   $30,000          $20,000          +50%

Interest Expense                              $2,000            $5,000           -60%

Even though the interest expense changed in a higher percentage (-60%), the question asked for which item increased the most, but the interest expense decreased.