Question : Which of the following statements are true?
A) Common-size balance sheet shows relative value of the various items.
B) In the common size income statement, each product is represented as a percentage of the net sales figure.
C) Common size income statements represent the various elements as a percentage of the gross profit.
Option 1: Both A and B
Option 2: Both A and C
Option 3: Both B and C
Option 4: A, B, C
Correct Answer: Both A and B
Solution : A balance sheet with a common size s hows the absolute amount as well as the proportionate percentage of total assets, total liabilities, and equity accounts.
An income statement that is expressed with each line item as a percentage of revenue or sales is known as a common size income statement . When performing a vertical analysis, each line item in a financial statement is represented as a percentage of the statement's base figure.
Hence the correct answer is option 1.
Related Questions
Trending Articles/News
