Question:
The statements which are useful both in intra firm comparison over different years and also in inter firm comparison for the same year or for several years are known as:
The statements which are useful both in intra firm comparison over different years and also in inter firm comparison for the same year or for several years are known as:
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Percentages remove the size effect, so they work for intra-firm and inter-firm comparison.
Updated On: Oct 26, 2026
- Comparative statement
- Common size statement
- Income statement
- Cash flow statement
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The Correct Option is B
Solution and Explanation
Step 1: Understand the question:
The question asks which statements help in comparing a firm with itself over different years and also with other firms in the same year.
Step 2: Think about what each statement shows:
Common size statement: every item is a percentage of a base. Firms of different size become comparable because rupee size no longer matters.
Comparative statement: shows changes between years for one firm, but rupee figures of firms of different size are hard to compare.
Step 3: Match with the options:
Percentages allow comparison across years (intra-firm) and across firms (inter-firm). So the answer is Common size statement.
Step 4: Why the other options are wrong:
Option (A) Comparative statement is mainly for intra-firm comparison over years. Because it works on rupee amounts, it is of limited use for firms of unequal size.
Option (C) Income statement is just the Statement of Profit and Loss. It is not a tool of comparison.
Option (D) Cash flow statement reports cash inflows and outflows of one period. It is not built for this comparison.
Final Answer:
Common size statements serve both intra-firm and inter-firm comparison. Option (B).
The question asks which statements help in comparing a firm with itself over different years and also with other firms in the same year.
Step 2: Think about what each statement shows:
Common size statement: every item is a percentage of a base. Firms of different size become comparable because rupee size no longer matters.
Comparative statement: shows changes between years for one firm, but rupee figures of firms of different size are hard to compare.
Step 3: Match with the options:
Percentages allow comparison across years (intra-firm) and across firms (inter-firm). So the answer is Common size statement.
Step 4: Why the other options are wrong:
Option (A) Comparative statement is mainly for intra-firm comparison over years. Because it works on rupee amounts, it is of limited use for firms of unequal size.
Option (C) Income statement is just the Statement of Profit and Loss. It is not a tool of comparison.
Option (D) Cash flow statement reports cash inflows and outflows of one period. It is not built for this comparison.
Final Answer:
Common size statements serve both intra-firm and inter-firm comparison. Option (B).
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