Question

A ______ standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively.

A. tax reconciliation statement
B. Statement of standardization
C. Statement of cash flows
D. Common-base year statement
E. Common-size statement

Answer 1

A common-size statement standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively. The answer is E

Step-by-step explanation:

A common-size statement standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively. It is used to analyze the relative proportions of different items within a financial statement and compare the performance of different companies or time periods.

The answer is E. Common-size statement, which standardizes financial statement items as percentages, facilitating comparisons between companies regardless of size.

The correct answer to the question is E. Common-size statement. A common-size statement standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively. This standardization makes it easier to compare financial statements of different-sized companies by expressing all figures as percentages. A common-size balance sheet will show each asset, liability, and equity item as a percentage of total assets, while a common-size income statement will show each income and expense item as a percentage of total sales. A common-size statement standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively. It is used to analyze the relative proportions of different items within a financial statement and compare the performance of different companies or time periods. The answer is E. Common-size statement, which standardizes financial statement items as percentages, facilitating comparisons between companies regardless of size.