Question

When completing a differential analysis, when are the differences shown as positive amounts? As negative amounts?

Short answer

Answer

Ifrevenues increase from alternative one to two, it is positive, and ifrevenue decreasesfrom alternative one to two, it is shown as negative.

Step-by-step solution

Step-by-Step SolutionStep 1: Meaning of Differential Analysis

Differential analysis refers to the technique used by business entities to make decisions that examine thebenefits and costs associated with the two available options and compare thenet results.

Negative and positive amounts in differential analysis

When completing adifferential analysis, the differences are positive if the revenues or expenses from the second alternative are greater than the first alternative.

In addition, the differences are shown as negative if revenues or expenses from the second alternative are less than the first alternative.