Question

Comparing each ite on a financial statement with a total amount from the same statement is useful in analyzing relationships within the financial statement. ____________________________ is the term used to describe such comparisons.

Answer 1

Common-size analysis is the term employed to describe the comparison of items of a financial statement with a total from that statement.

Step-by-step explanation:

Comparing each item on a financial statement with a total amount from the same financial statement refers to the analysis technique known as common-size analysis. This method allows for the assessment of relationships within the financial statement by expressing each line item as a percentage of a total. For instance, in an income statement, various items like gross sales, operating expenses, or net profit could be expressed as a percentage of total sales. This technique is broadly used for comparative analysis and provides insight into the structure and operations of a business over different periods or versus competitors.