Question

What are comparative financial statements?

Answer 1

Those financial statements that enable intra-firm and inter-firm comparisons of financial statements over a period of time are called comparative financial statements. In other words, these statements help the accounting users to evaluate and assess the financial progress in relative terms. 

The following are the two comparative financial statements that are commonly prepared:

1. Comparative balance Sheet
2. Comparative Income Statements

Answer 2

When financial statements' figures for two or more years are placed side-by-side to facilitate comparison, these are called comparative financial statements. Such statements include columns that show the increase or reduction in these data from one year to the next in absolute and percentage terms.