What is Common-size Financial Statement?

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Q. What is Common-size Financial Statement?

West Bengal WbchseWBCHSE West Bengal HS (Class-12) Commerce Board 2015Subjective· 1mImportance★★★★★

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A Common-size Statement restates each item as a percentage of a common base (sales, or total assets/liabilities), making structural comparison across years or firms easy regardless of size.

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CBSE 2026Set MARCH1 mark
$Q. Common Size Statement is also known as __________ analysis.$
›Reveal solutionSolution

A common size statement is also known as vertical analysis.

In a common size statement each figure is shown as a percentage of a common base of the same year - for a common size statement of profit and loss, revenue from operations is taken as 100; for a common size balance sheet, total is taken as 100. Because the comparison is made within a single period (down the statement), it is called vertical analysis, as opposed to horizontal (year-to-year) ana …

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CBSE 2026Set ANNUAL1 markMCQ
$Q. Common-size statement is an example of$
(a) Horizontal analysis
(b) Vertical analysis
(c) Ratio analysis
(d) Cash flow analysis
›Reveal solutionSolution
Common-size statements convert each line item into a percentage of a common base within a single year's statement — this intra-period, "down-the-column" comparison is exactly what defines vertical analysis.

Financial statement analysis techniques are broadly classified as:

Horizontal Analysis — compares the SAME item across MULTIPLE years (e.g., a Comparative Statement showing absolute and percentage change in Sales from one year to the next). It looks "across" time.

Vertical Analysis — compares DIFFERENT items WITHIN the same year's statement, each expressed as a percentage of one common base figure (e.g., every expense/income item in the Income Statement expressed as a % of Revenue from Operations, or every Balance Sheet item expressed as a % of Total Assets). It looks "down" a single column. …
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CBSE 2025Set MARCH1 markMCQ
$Q. The expenses of the current year of a company is ₹ 3,00,000 and if it is increased by 20% compared to the previous year, what would be the expenses of the previous year?$
(a) ₹ 60,000
(b) ₹ 2,50,000
(c) ₹ 3,60,000
(d) None of these
›Reveal solutionSolution

Previous year expense = Current ÷ (1 + 20%) = 3,00,000 ÷ 1.20 = ₹2,50,000. Correct option: (b).

GSEB Class-12 Commerce comparative-statement numerical:

Step Working Amount
Current year expense given ₹3,00,000
Increase over previous year 20% —

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CBSE 2025Set MARCH1 markMCQ
$Q. Tangible assets of a company increased from ₹ 4,00,000 to ₹ 5,00,000. What is the percentage of change?$
(a) a) 20%
(b) b) 25%
(c) c) 33%
(d) d) 50%
›Reveal solutionSolution

% change = (change ÷ base year) × 100 = (1,00,000 ÷ 4,00,000) × 100 = 25%. Correct option: (b).

In a comparative statement the percentage of change is always calculated on the base year (the earlier year) figure:

Item Amount
Base (old) tangible assets ₹4,00,000

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CBSE 2025Set ANNUAL1 markMCQ
$Q. Common size financial statements are mostly prepared in the form of (A) Ratio (B) Percentage (C) Both (A) and (B) (D) None of these$
›Reveal solutionSolution
In common-size statements each item is restated as a percentage of a common base, so the statements are prepared in percentage form. Hence the answer is (B) Percentage.

For the BSEB Inter / Bihar Class-12 Accountancy syllabus, common-size statements make figures comparable regardless of size:

In a common-size Statement of Profit and Loss, every item is shown as a percentage of net sales (taken as 100). …
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CBSE 2025Set ANNUAL1 markMCQ
$Q. Tangible assets of a company are increased from Rs. 4,00,000 to Rs. 5,00,000. What is the percentage of change ? (A) 20% (B) 25% (C) 33 1/3 % (D) 50%$
›Reveal solutionSolution

The tangible assets rose by Rs 1,00,000 on a base of Rs 4,00,000, a 25 percent increase, so the answer is (B).

This is a comparative-statement style calculation from BSEB Inter / Bihar Class-12 Accountancy, matching the NCERT/CBSE approach to financial statement analysis.

Particulars Amount (Rs)
Value at the beginning (base) 4,00,000
Value at the end 5,00,000
Absolute change (increase) 1,00,000
…

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CBSE 2025Set ANNUAL1 mark
$Q. What is meant by Common Size Balance Sheet?$
(OR)
$What do you mean by Debt-equity ratio?$
›Reveal solutionSolution

Common Size Balance Sheet states each item as a percentage of the total; Debt-Equity Ratio = Debt / Equity (shareholders' funds).

What is meant by Common Size Balance Sheet?

A common size balance sheet is a statement in which every item is shown not only in absolute figures but also as a percentage of a common base - usually the total of assets (which equals the total of equity and liabilities, taken as 100). This converts the balance sheet into a vertical percentage form, making it easy to study the proportionate composition of assets and liabilities and to compare the structure across years or firms of different sizes.

OR - What do you mean by Debt-Equity Ratio?

The debt-equity ratio is a solvency ratio that compares a firm's long-term outside borrowings with the owners' funds: …

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CBSE 2025Set ANNUAL1 mark
$Q. A company had Furniture worth Rs. 6,00,000 in 2022 and Rs. 5,64,000 in 2023. Determine the percentage changes.$
›Reveal solutionSolution

Percentage change = (Current year value − Base year value) ÷ Base year value × 100 = (5,64,000 − 6,00,000) ÷ 6,00,000 × 100 = −6%.

Step 1 — Absolute change:

5,64,000 − 6,00,000 = −36,000 (a decrease of Rs. 36,000)

Step 2 — Percentage change (base year 2022 = 100%): …

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CBSE 2025Set ANNUAL1 mark
$Q. The absolute amount of Reserves & Surplus in the Common Size Balance Sheet of a company during the year is Rs. 15,00,000 and the total Liabilities were Rs. 40,00,000. What is the percentage of Reserves and Surplus over total liabilities of the company?$
›Reveal solutionSolution

In a Common Size Balance Sheet, every item on the liabilities side is expressed as a percentage of Total Liabilities (= Total of Balance Sheet).

Step-by-step working

Percentage of Reserves & Surplus over Total Liabilities

= (Reserves & Surplus ÷ Total Liabilities) × 100

= (Rs. 15,00,000 ÷ Rs. 40,00,000) × 100

= 0.375 × 100

= 37.5%

…

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CBSE 2024Set MARCH1 markMCQ
$Q. Comparative statements are also known as —————.$
(a) a) Dynamic analysis
(b) b) Horizontal analysis
(c) c) Vertical analysis
(d) d) External analysis
›Reveal solutionSolution

The correct option is (b) Horizontal analysis.

Comparative statements place the amounts of two or more accounting periods next to each other and show the absolute change and percentage change over time. Because the comparison moves across periods (year on year), it is called horizontal analysis. Vertical analysis, by contrast, expresses each item as a perce …

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CBSE 2024Set ANNUAL1 markMCQ
$Q. Under which tool of financial analysis, 100% is taken as base and all other related amounts are expressed as a percentage of base?$
(a) Common-size Statement.
(b) Comparative Statement.
(c) Ratio Analysis.
(d) Cash Flow Statement.
›Reveal solutionSolution

The tool where 100% is the base and every item is shown as a percentage of it is the Common-size Statement — option (a).

In a common-size statement, a chosen figure is taken as 100% (net sales/revenue from operations in a common-size income statement, and total of the balance sheet in a common-size balance sheet), and every other item is expressed as a percentage of that base. This makes the internal structure of the statements comparable across firms and across years regardless of size.

…

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CBSE 2024Set ANNUAL1 mark
$Q. Either attempt question number$
(ix) to (xii)
(OR)
$(xiii) to (xvi). Only one series of questions to be answered from the above mentioned series of questions. What is Comparative Financial Statement? Or What is Ratio Analysis?$
›Reveal solutionSolution

A Comparative Financial Statement sets out two or more years' figures side by side with their absolute and percentage change; Ratio Analysis studies the relationship between two related accounting figures.

Part 1 — Comparative Financial Statement:

A comparative financial statement is a statement in which the financial data (of the income statement or balance sheet) for two or more periods are presented side by side, along with the absolute change and the percentage change between the periods. It helps assess the direction and rate of change (trend) in each item over time.

Part 2 (Or) — Ratio Analysis: …

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Step	Working	Amount
Current year expense	given	₹3,00,000
Increase over previous year	20%	—

Item	Amount
Base (old) tangible assets	₹4,00,000

Particulars	Amount (Rs)
Value at the beginning (base)	4,00,000
Value at the end	5,00,000
Absolute change (increase)	1,00,000
…

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Q.What is Common-size Financial Statement?

Concept understanding — Comparative and Common Size Statements

Step-by-step working

Q.What is Common-size Financial Statement?

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