Question

In the statement of profit & loss of a common size statement ______.

Options

• Figure of net revenue from operations is assumed to be equal to 100

• Figure of gross profit is assumed to be equal to 100

• Figure of net profit is assumed to be equal to 100

• Figure of assets is assumed to be equal to 100

Answer 1

In the statement of profit & loss of a common size statement figure of net revenue from operations is assumed to be equal to 100.

Explanation:

In a Common size profit and loss statement, each item of income and expense is expressed as a percentage of net revenue from operations (net sales), which is assumed to be 100%. This helps in determining how each expense or income item contributes to total revenue and comparing profitability across different time periods or companies.