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Explain the procedure for preparing common – size statement. |
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Answer» Common – size statements can be prepared with three columns. Following are the steps to be followed in preparation of common – size statement. 1. Column 1. In this column, particulars of items of income statement or balance sheet are written. 2. Column 2. Enter absolute amount. 3. Column 3. Choose a common base as 100. For example, Revenue from operations can be taken as the base for income statement and total of balance sheet can be taken as the base for balance sheet. Work out the percentage for all the items of column 2 in terms of the common base and enter them in column 3. |
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