Which of the following is true about a common size balance sheet?
A) The assets, liabilities, and equities are reported at its market value.
B) The assets, liabilities, and equities are reported as a percentage of common stock.
C) The assets, liabilities, and equities are reported as a percentage of total assets.
D) The assets, liabilities, and equities are arranged in the alphabetical order.
E) The assets, liabilities, and equities are reported as a percentage of the assets, liabilities, and equities of a competing firm.

Question

Quizplus · Accepted Answer

In a common size balance sheet, the assets, liabilities, and equities are reported as a percentage of total assets. This allows for easier comparison between companies of different sizes and can help identify areas where a company may be over or underinvested. Reporting at market value (A), as a percentage of common stock (B), in alphabetical order (D), or as a percentage of a competing firm (E) are not characteristics of a common size balance sheet.

Which of the Following Is True About a Common Size