Advertisements
Advertisements
Question
The objective of the common size statement of profit and loss is not to ______.
Options
Present changes in various items of incomes and expenses
Judge the cost items
Establish relationship between revenue from operations and other items of statement of profit & loss
Judge the relative financial soundness for different enterprises
Advertisements
Solution
The objective of the common size statement of profit and loss is not to judge the relative financial soundness for different enterprises.
Explanation:
The objective of a common size Statement of Profit and Loss is to analyse and evaluate the relationship of various things to net revenue from operations, rather than to assess overall financial soundness, which is normally accomplished through ratio or balance sheet analysis.
APPEARS IN
RELATED QUESTIONS
Following is the Income statements, prepare a Common Size Income Statements of Jayant
Ltd. For the year ended 31-3-2011:
Income Statement of Jayant Ltd.
for the year ended 31.3.2011
| Particulars |
Amount Rs |
| Income: | |
| Sales | 25,38,000 |
| Other Incomes | 38,000 |
| Total Income | 25,76,000 |
| Expenses: | |
| Cost of goods sold | 14,00,000 |
| Operating expenses | 5,00,000 |
| Total Expenses | 19,00,000 |
| Tax | 3,38,000 |
Prepare a common size Income Statements of Raj Ltd. for the year ended 31-3-2011.
Solve the following:
In common size balance sheet fixed assets are Rs 50,000 and balance sheet total as Rs 1,50,000. Find out percentage of fixed assets to total assets.
Explain how common size statements are prepared giving an example.
Prepare a Common Size balance sheet from the following balance sheet of Aditya Ltd. and Anjali Ltd.:
| Particulars | Aditya Ltd. Rs. |
Anjali Ltd. Rs. |
| I. Equity and Liabilities | ||
|
a) Equity share capital |
6,00,000 | 8,00,000 |
|
b) Reserves and surplus |
3,00,000 | 2,50,000 |
|
c) Current liabilities |
1,00,000 | 1,50,000 |
| Total | 10,00,000 | 12,00,000 |
| II. Assets | ||
|
a) Fixed assets |
4,00,000 | 7,00,000 |
|
b) Current assets |
6,00,000 | 5,00,000 |
| Total | 1,00,0000 | 12,00,000 |
From the following Statement of Profit and Loss of Star Ltd., for the year ended 31st March, 2015 and 2016, prepare a Common-size statement:
| Particulars | Note No. | 2015-16 |
2014-15 |
||
| Revenue from Operations | ₹ 25,00,000 | ₹ 20,00,000 | |||
| Employee Benefit Expenses | ₹ 10,00,000 | ₹ 7,00,000 | |||
| Other Expenses | ₹ 2,00,000 | ₹ 3,00,000 | |||
|
Tax Rate |
40% |
40% |
|||
Prepare Common-size Statement of Profit and Loss from the following Statement of Profit and Loss:
|
Particulars |
Note No. |
31st March, 2018 (₹) |
| I. Income | ||
|
Revenue from Operations |
15,00,000 | |
|
Other Income |
60,000 |
|
|
Total Revenue |
15,60,000 | |
| II. Expenses |
|
|
|
Purchases of Stock-in-Trade |
7,50,000 | |
|
Change in Inventories of Stock-in-Trade |
50,000 | |
|
Other Expenses |
2,10,000 |
|
|
Total |
10,10,000 |
|
| III. Net Profit before Tax (I-II) | 5,50,000 |
Prepare Common-size Statement of Profit and Loss from the following Statement of Profit and Loss:
|
Particulars |
Note No. |
Year I (₹) |
Year II (₹) |
| I. Income | |||
|
Revenue from Operations (Net Sales) |
14,00,000 |
16,00,000 |
|
| II. Expenses | |||
|
Purchases of Stock-in-Trade |
9,00,000 |
10,00,000 |
|
|
Change in Inventories of Stock-in-Trade |
1,00,000 |
1,80,000 |
|
|
Finance Costs |
80,000 |
80,000 |
|
|
Other Expenses |
90,000 |
1,30,000 |
|
|
Total |
11,70,000 |
13,90,000 |
|
| III. Profit before Tax (I-II) |
2,30,000 |
2,10,000 |
|
| IV. Tax |
40,000 |
36,000 |
|
| V. Profit After Tax (III-IV) |
1,90,000 |
1,74,000 |
Common size statements are prepared ______.
Prabhu wants to know the main objective of Common Size Statement, help him to choose one:
From the following Balance Sheet of Rohit Ltd., prepare a Common Size Balance Sheet:
| Balance Sheet of Rohit Ltd. as at 31st Mach, 2021 |
|||
| Particulars | Note No. | 31st March 2021 (₹) |
31st March 2020 (₹) |
| I. Equity and Liabilities | |||
| 1. Shareholders' Funds | 3,20,000 | 1,60,000 | |
| 2. Current Liabilities | 80,000 | 40,000 | |
| Total | 4,00,000 | 2,00,000 | |
| II. Assets | |||
| 1. Non-Current Assets | 3,00,000 | 1,50,000 | |
| 2. Current Assets | 1,00,000 | 50,000 | |
| Total | 4,00,000 | 2,00,000 | |
