Question

Select the appropriate answer from the alternatives given below & rewrite the completed statements :

The common size statement requires _____________.
a) choose of common base
b) journal entries
c) cash and flow
d) current ratio

Answer 1

The common size statement requires choose of common base.

Explanation: Common size statements require choosing a common base for drawing conclusions. All the items in the balance sheet or the income statement are converted as a percentage of a common base and compared to the previous year or for the same period with different firms. The common base is an aggregate such as total of balance sheet or total of net sales.