Question

What is comparative income statement? Give a specimen of comparative income statement with the help of imaginary figures.

Hint:

Use comparative statements to evaluate performance trends and identify areas needing improvement over multiple periods.

Answer 1

Comparative Income Statement: A comparative income statement presents financial data for two or more periods side by side, enabling users to analyze the changes in revenue, expenses, and profits over time. It highlights trends and helps stakeholders make informed decisions. Specimen of Comparative Income Statement: 

Comparative Income Statement of XYZ Ltd. 
\[\begin{array}{|l|r|r|r|} \hline Particulars & 2022 (Rs.) & 2023 (Rs.) & Increase/Decrease (Rs.) \\ \hline \text{Revenue from Operations} & \text{5,00,000} & \text{6,00,000} & \text{1,00,000} \\ \hline \text{Cost of Goods Sold} & \text{3,00,000} & \text{3,50,000} & \text{50,000} \\ \hline \text{Gross Profit} & \text{2,00,000} & \text{2,50,000} & \text{50,000} \\ \hline \text{Operating Expenses} & \text{50,000} & \text{60,000} & \text{10,000} \\ \hline \text{Net Profit} & \text{1,50,000} & \text{1,90,000} & \text{40,000} \\ \hline \end{array}\]

Explanation: - The comparative income statement helps identify changes in revenue, costs, and profits, enabling better analysis and decision-making.