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Question
The statement in which individual items of financial statements of two or more years are placed side by side and converted into percentage of a common base is ______.
Options
Comparative Statements.
Common-size Statements.
Financial Statements.
None of these.
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Solution
The statement in which individual items of financial statements of two or more years are placed side by side and converted into percentages of a common base is common-size statements.
Explanation:
A common-size statement is a vertical analysis tool where financial data of two or more years are placed side-by-side. Instead of showing absolute changes, every single individual line item is divided by a common base (such as Total Assets in a Balance Sheet or Revenue from Operations in an Income Statement) and converted into a clear percentage.
