Question

The statement which expresses all items of a financial statement as a percentage of some common base is :

• A. Statement of Profit and Loss
• B. Position Statement
• C. Common Size Statement
• D. Comparative Statement

Hint:

Every item as a percentage of one base is a common size statement.

Answer 1

The Correct Option is C

Step 1: Understand the question:
The question asks for the statement in which every item is shown as a percentage of one common base figure.

Step 2: Recall how a common size statement is made:
For the Balance Sheet the base is usually total assets or total liabilities. For the Statement of Profit and Loss the base is revenue from operations.
Each item is divided by the base and multiplied by 100.
Example: if total assets are Rs. 10,00,000 and inventory is Rs. 2,00,000, inventory is 20 percent.

Step 3: Match with the options:
This method is the Common Size Statement. It is also called vertical analysis, because it reads down one year.

Step 4: Why the other options are wrong:
Option (A) Statement of Profit and Loss is a financial statement with rupee amounts. It has no common base.
Option (B) Position Statement is another name for the Balance Sheet. It lists assets and liabilities in rupees.
Option (D) Comparative Statement compares two or more years with absolute and percentage change. The percentage is the change over the previous year, not a share of a common base.

Final Answer:
The statement is the Common Size Statement. Option (C).