A commonsized balance sheet is prepared by expressing each stockholders' equity item as a percent of:
A)total sales.
B)total liabilities plus stockholders' equity.
C)total stockholders' equity.
D)total liabilities.

Question

A common­sized balance sheet is prepared by expressing each stockholders' equity item as a percent of:
A)total sales.
B)total liabilities plus stockholders' equity.
C)total stockholders' equity.
D)total liabilities.

Quizplus · Accepted Answer

Expressing each stockholders' equity item as a percent of total liabilities plus stockholders' equity allows for an accurate representation of the company's financial health and the relationship between the amount funded by creditors and stockholders. It also ensures that the balance sheet remains balanced, as total assets must equal total liabilities plus stockholders' equity.

A Common­sized Balance Sheet Is Prepared by Expressing Each Stockholders

A Commonsized Balance Sheet Is Prepared by Expressing Each Stockholders