Match List-I with List-II. LIST I LIST II (A) Statements which indica…

Match List-I with List-II.

LIST I	LIST II
(A) Statements which indicate the relationship of different items of a financial statement with a common item by expressing each item as a percentage of that common item	(I) Trend Analysis
(B) Technique of studying the operational results and financial position over a series of years	(II) Comparative Statements
(C) Statements showing the profitability and financial position of a firm for different periods of time in a comparative form to give an idea about the position of two or more periods	(III) Ratio Analysis
(D) Describes the significant relationship which exists between various items of a balance sheet and a statement of profit and loss of a firm	(IV) Common-Size Statements

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A)-(IV), (B)-(I), (C)-(II), (D)-(III)

Each tool of financial analysis is known by what it compares: items against a common base, a series of years, periods side by side, or items against one another.

(A) Statements which express each item as a percentage of a common item — this matches (IV) Common-Size Statements. Every item is shown as a percentage of one base (vertical analysis).

(B) Technique of studying results and position over a series of years — this matches (I) Trend Analysis. It follows items over several years against a base year.

(C) Statements showing two or more periods in a comparative form — this matches (II) Comparative Statements. They place the periods side by side (horizontal analysis).

(D) The significant relationship between items of the balance sheet and the statement of profit and loss — this matches (III) Ratio Analysis. A ratio relates one item to another.

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Comparative Statements: These are the statements showing the profitability and financial position of a firm for different periods of time in a comparative form to give an idea about the position of two or more periods.”

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Common Size Statements: These are the statements which indicate the relationship of different items of a financial statement with a common item by expressing each item as a percentage of that common item.”

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Trend Analysis: It is a technique of studying the operational results and financial position over a series of years.”

NCERT (2026-27 edition):
Tools of Analysis of Financial Statements – “… Ratio Analysis: It describes the significant relationship which exists between various items of a balance sheet and a statement of profit and loss of a firm.”