This tool of Analysis of financial statement indicates the relationship between different items of a financial statement with a common item by expressing each item as a percentage of that common item. Identify this analysis tool.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Common Size statement
A Common Size statement states every item as a percentage of a common base – total assets in the Balance Sheet and revenue from operations in the Statement of Profit and Loss.
Option (1) Comparative statement — Incorrect. It sets the figures of two or more periods side by side.
Option (3) Ratio Analysis — Incorrect. It relates two chosen items to each other, not every item to one base.
Option (4) Trend Analysis — Incorrect. It compares each year’s figure with a base year’s figure over a series of years.
NCERT (2026-27 edition): |