Question

Which year can be selected for calculating trend percentage?

• A. Current year
• B. Previous year
• C. Base year
• D. None of these

Hint:

In trend analysis, always choose a stable year as the base year and assign it a value of 100.

Answer 1

The Correct Option is C

Step 1: Concept of trend analysis.
Trend analysis is a method to study the direction of financial statement items over a period of years. It helps identify growth, stability, or decline.
Step 2: Selection of year.
For calculating trend percentages, a base year is selected. In this year, each item is taken as 100, and subsequent years are expressed as percentages of the base year.
Step 3: Eliminate wrong options.
- Current year: Not taken as base, used only for comparison.
- Previous year: Not fixed, comparisons are always relative to base year.
- None: Wrong, because base year is correct.
Step 4: Conclude.
Hence, trend percentage is always calculated with respect to a base year.
Final Answer: \[ \boxed{\text{Base year}} \]