Explain the following :

Comparative income statement

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Solution

It is a statement that compares the revenue and expenses of the current and previous year of a business and helps in knowing the trends in the business. It reflects the increase/decrease in the revenue and expenses and explains the trends in the financials and how the business reacts to the changes in the market.

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What is the importance of comparative statements? Illustrate your answer with particular reference to comparative income statement.

The ultimate purpose of the comparative (Income) financial statement analysis is as follows :

Q. Prepare Comparative Income Statements from the following

$\begin{matrix} P a r t i c u l a r s & 31 - 3 - 2011 & 31 - 3 - 2012 Revenue from Operations & 10,00,000 & 15,00,000 Expenses & 6,00,000 & 10,50,000 Other Income & 2,00,000 & 1,80,000 Income Tax & 50 % & 50 % \end{matrix}$

Q. From the following information of Narsimhan Company Limited, prepare a Comparative Income Statement for the years 2011-2012.

\begin{matrix} Particulars & 2011(Rs) & 2012 (Rs) Gross Sales & 7, 25, 000 & 8, 15, 000 (-) Return & (25, 000) - -------- - & (15, 000) - -------- - Net Sales & 7, 00, 000 & 8, 00, 000 Cost of Goods Sold & 5, 95, 000 & 6, 15, 000 Gross Profit & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 1, 05, 000 - -------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 1, 85, 000 - -------- - Other Expenses Selling and Distribution Expenses & 23, 000 & 24, 000 Administration Expenses & 12, 700 & 12, 500 Total Expenses & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 35, 700 - -------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 36, 500 - --------- - Operating Income & 69, 300 & 1, 48, 500 Other Income & 1, 200 & 8, 050 ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 70, 500 & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 1, 56, 550 Non-operating Expenses & 1, 750 & 1, 940 Net Profit & 68, 750 - ------ - - ------ - & 1, 54, 610 - -------- - - -------- - \end{matrix}

From the following information of Narsimham Company Ltd., prepare a Comparative Income Statement for the years 2004-2005

Particulars	2004 Rs	2005 Rs
Gross Sales	7,25,000	8,15,000
Less : Returns	25,000	15,000
Net Sales	7,00,000	8,00,000
Cost of Goods Sold	5,95,000	6,15,000
Gross Profit	1,05,000	1,85,000
Other Expenses
Selling & distribution Expenses	23,000	24,000
Administration Expenses	12,700	12,500
Total Expenses	35,700	36,500
Operating Income	69,300	1,48,500
Other Income	1,200	8,050
	70,500	1,56,550
Non Operating Expenses	1,750	1,940
Net Profit	68,750	1,54,610

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Explain the following : Comparative income statement

Explain the following :

Comparative income statement