Question

Statement I: Common-size Statement is the horizontal analysis of financial statements.

Statement II: Shareholders’ Funds is taken as common base for Common-size Balance Sheet.

पर्याय

• Both statements are true.

• Both statements are false.

• Statement I is true, and Statement II is false.

• Statement I is false, and Statement II is true.

Answer 1

Both statements are false.

Explanation:

Both statements are false because a Common-size Statement is a vertical analysis (not horizontal) tool that evaluates financial data from a single accounting period by converting every line item into a percentage of a chosen base. Furthermore, Statement II is false because the common base used for a Common-size Balance Sheet is Total Assets or Total Equity and Liabilities (assumed to be 100%), rather than Shareholders’ Funds alone.