Consider the following statements given below:

(Ist statement)- In Common-size Balance Sheet, each item is converted into the percentage of share capital.
(2nd statement)- In the Common-size Statement of Profit and Loss, each item is converted into the percentage of total expenses.
(3rd statement)- In the Comparative Statement of Profit and Loss, absolute and percentage changes in the items during two periods of time are calculated.

Chose the correct option that states which statement is true.

3rd statement

The correct answer is option 3- 3rd statement.

(Ist statement)- In Common-size Balance Sheet, each item is converted into the percentage of share capital. It is wrong as each item is converted into the percentage of total of liabilities side.

(2nd statement)- In the Common-size Statement of Profit and Loss, each item is converted into the percentage of total expenses. It is wrong as each item is converted into the percentage of total of revenue.

(3rd statement)- In the Comparative Statement of Profit and Loss, absolute and percentage changes in the items during two periods of time are calculated. It is true. These statements refer to the statement of profit and loss and the balance sheet prepared by providing columns for the figures for both the current year as well as for the previous year and for the changes during the year, both in absolute and relative terms. As a result, it is possible to find out not only the balances of accounts as on different dates and summaries of different operational activities of different periods, but also the extent of their increase or decrease between these dates. The figures in the comparative statements can be used for identifying the direction of changes and also the trends in different indicators of performance of an organisation.