Which of the following is NOT true of common-size income statements?
A) Each income statement item is standardised by dividing it by total assets.
B) Income statement accounts are represented as percentages of sales.
C) Each income statement item is standardised by dividing it by sales.
D) Common-size financial statement analysis is a specialised application of ratio analysis.

Question

Quizplus · Accepted Answer

Common-size income statements standardise each income statement item by dividing it by a common denominator, which is either total assets or sales. Option A is incorrect because common-size analysis can divide items by sales instead of total assets.

Which of the Following Is NOT True of Common-Size Income