Common-size analysis is based on the preparation of common-sized financial statements,i.e. ,an income statement and a balance sheet presented in percentage of a base figure (indexed as 100).What is generally the base for the income statement?
A) Net income
B) Net sales
C) Exceptional revenue
D) Interest expense

Question

Quizplus · Accepted Answer

The most common base for the income statement in common-size analysis is net sales, as it provides a clear indication of the relative size of each expense item to the company's revenue. By expressing each expense as a percentage of the total revenue, it allows for easy comparison between different periods or companies in similar industries.

Common-Size Analysis Is Based on the Preparation of Common-Sized Financial