On a common-size balance sheet,each line item is expressed as a percentage of:
A)current assets.
B)operating income.
C)total assets.
D)net income.

Question

Quizplus · Accepted Answer

On a common-size balance sheet, each line item is expressed as a percentage of total assets. This helps to analyze the relative proportions of different assets, liabilities, and equity in a company's financial structure. It also enables comparisons between companies of different sizes and industries, as the percentages provide a standardized basis for evaluation. Expressing line items as a percentage of current assets, operating income, or net income would not provide a comprehensive view of the company's financial position and performance.

On a Common-Size Balance Sheet,each Line Item Is Expressed as a Percentage