Question

The statement which expresses all items of a financial statement as a percentage of some common base is:

• A. Comparative Statement
• B. Common Size Statement
• C. Statement of Profit and Loss
• D. Position Statement

Hint:

Common Size Statements help in vertical analysis by simplifying comparisons between firms or across periods regardless of size.

Answer 1

The Correct Option is B

A Common Size Statement expresses all components of a financial statement (like balance sheet or income statement) as a percentage of a common base:
- For Balance Sheet: Each item is shown as a percentage of total assets or total liabilities.
- For Income Statement: Each item is shown as a percentage of total revenue.