Question

In the balance sheet of a common size statement ______.

Options

• Figure of share capital is assumed to be 100

• Figure of current liabilities is assumed to be 100

• Figure of non-current assets is assumed to be 100

• Figure of total assets is assumed to be 100

Answer 1

In the balance sheet of a common size statement figure of total assets is assumed to be 100.

Explanation:

In a common size balance sheet, each item is expressed as a percentage of the total assets (or total liabilities and equity) which is taken as 100. This allows easy comparison across companies or periods regardless of the size of the balance sheet. Hence, the figure of total assets is assumed to be 100 in the statement.