Choose the correct statements.
(A) The financial statements of a business enterprise include cash flow statements.
(B) Common size statements and financial ratios are the two tools employed in vertical analysis.
(C) Financial analysis helps an analyst to arrive at a decision.
(D) Comparative statements are the form of vertical analysis.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (B) and (C) only
(A) The financial statements of a business enterprise include cash flow statements. Correct. Along with the balance sheet and the statement of profit and loss, the cash flow statement is one of the financial statements.
(B) Common size statements and financial ratios are the two tools employed in vertical analysis. Correct. Both study the figures of one period against each other or against a common base.
(C) Financial analysis helps an analyst to arrive at a decision. Correct. Its purpose is to give users a sound basis for their decisions.
(D) Comparative statements are the form of vertical analysis. Incorrect. Comparative statements set the figures of two or more periods side by side, which is horizontal analysis.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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