Question

Compute the annual dollar changes and percent changes for each of the following accounts.

	2017	2016
Short-term investments	\(374,634	\)234,000
Accounts receivable	97,364	101,000
Notes payable	0	88,000

Short answer

	Increase/(Decrease)	Percentage change
Short-term investments	$140,634	60.1%
Accounts receivable	($3,636)	(3.6%)
Notes payable	($88,000)	(100%)

Step-by-step solution

Definition of Common Size Financial Statements

Common-size financial statements can be defined as the financial statement in which each line item is reflected as a percentage of the selected common base amount.

Calculation of annual dollar change and percentage change

	2016	2017	Increase/(Decrease)	Percentage change
Short-term investments	$234,000	$374,634	$140,634	60.1%
Accounts receivable	101,000	97,364	($3,636)	(3.6%)
Notes payable	88,000	0	($88,000)	(100%)

Step 3: Formula for calculation of percentage change

$\mathbf{\text{Percentagechange}}\mathbf{=}\frac{\mathbf{\text{Increase/(Decrease)}}}{\mathbf{\text{Valuein2016}}}\mathbf{\times }\mathbf{100}$