Question

Common-size statements: Multiple Choice

Reveal changes in the relative importance of each financial statement item to a base amount.
Do not emphasize the relative importance of each item.
Compare financial statements over time.
Show the dollar amount of change for financial statement items.
Reveal patterns in data across successive periods.

Answer 1

Reveal changes in the relative importance of each financial statement item to a base amount.

Step-by-step explanation:

In the common-size statements, the items would be displayed in the percentage form that is based on the base value rather than the absolute values.

The preparation of this statement is to do the proper analyses of each item with period to period of the similar company so that proper decisions should be taken. In addition, it would also create its importance with respect to the item mentioned in the financial statement