Question : Every item of the Balance Sheet is expressed as % of _________ while preparing Common-size Balance Sheet.
Option 1: Non-current Assets
Option 2: Current Assets
Option 3: Total Assets
Option 4: Net sales
Answer (1)
25th Jan, 2024
Correct Answer: Total Assets
Solution : Answer = Total Assets
Each item is expressed as a proportion of total assets or total liabilities and shareholders' equity in a common-size balance sheet. As a result, comparing various businesses or historical periods is much simpler.
For instance, inventory might be stated as 10% of total assets if a company had Rs.1,00,000 in inventory and Rs.10,00,000 in total assets.
Hence, the correct option is 3.
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