Question

What is meant by comparative income statement? How is it prepared?

Hint:

Comparative statements help in trend analysis by showing not just figures but direction and percentage change.

Answer 1

Step 1: Define.
It is one of the comparative financial statements used for analysis of profitability trends.
Step 2: Purpose.
To compare performance of a business over different years and identify growth/decline in income, expenditure and net profit.
Step 3: Preparation steps.

List all items of Income Statement (Sales, Other Income, Expenses, Taxes, Net Profit).
Prepare columns for at least two years (e.g., 2023 and 2024).
Show absolute figures for both years side by side.
Add a column for change (increase/decrease) in absolute terms.
Add another column for percentage change.

Step 4: Example (format). \[ \begin{array}{|c|c|c|c|c|} \hline Particulars & 2023 & 2024 & Change (₹) & Change (%)
\hline Sales & 10,00,000 & 12,00,000 & +2,00,000 & +20%
Expenses & 7,00,000 & 8,40,000 & +1,40,000 & +20%
Net Profit & 3,00,000 & 3,60,000 & +60,000 & +20%
\hline \end{array} \]
Final Answer: \[ \boxed{\text{Comparative Income Statement = side-by-side incomes/expenses of different years with absolute and % change.}} \] % Quciktip