Accountancy Part BAnalysis of Financial Statements

Common size analysis is of immense use for comparing enterprises whic…

Common size analysis is of immense use for comparing enterprises which differ substantially in size as it provides an insight into the structure of financial statements. Common Size Statements are also known as _____.

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Component Percentage Statement

NCERT (2026-27 edition):
Common Size Statement – “Common Size Statement, also known as component percentage statement, is a financial tool for studying the key changes and trends in the financial position and operational result of a company. Here, each item in the statement is stated as a percentage of the aggregate, or revenue from operations of which that item is a part. For example, a common size balance sheet shows the percentage of each asset to the total assets, and that of each liability to the total liabilities.”