Tag: preparation of common size statements

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Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Trendz Spa is a company listed on the Bombay Stock Exchange. Its Financial statements for the year ended 31 March 2015 Showed earning per share of Rs.136. 
On 1 October 2015, Trendz spa made a 3 for 1 bonus issue. According to IAS 33 - 'Earning per share', what figure for the 2015 EPS will be shown as comparative information in the financial statements for the year ended 31 March 2016?

  1. Rs.34

  2. Rs.45.36

  3. Rs.408

  4. Rs.544
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Earning per share = Earning for equity shareholders 
                                 ----------------------------------------------
                                             No. of shares. 
                                =    Rs-136
                                    -------------
                                       3 + 1 
                                = Rs-34 per share. 
Multiple choice accountancy tools of financial statement analysis - comparative and common-size statements preparation of common size statements comparative statements and common-size statements preparation of comparative statements

Observing changes in the financial variables across the years___________.

  1. Vertical analysis

  2. Horizontal analysis

  3. Inter firm comparison

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Observing changes in the financial variables across the years is done through horizontal analysis. Horizontal analysis is a trend analysis where the firm compares ratios, statements etc over a period of time. 

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

Common-size Income Statement is that statement in which amount of Revenue from Operations is taken as 100 and all other amounts are expressed as percentage thereof.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. Common-size Income statement is the vertical analysis of Income Statement. A vertical analysis is shows all items as percentages and not in absolute figures which provides better comparison. Each line item is expressed as a percentage figure of the base figure within the statement. The base is always shown as 100. 

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

A financial statement that shows both rupees and percentages in the report is referred to as ______________.

  1. A Balance sheet

  2. A Common size statement

  3. A Proportional financial statement

  4. A Relative statement of equity
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A common size statement expresses each item in the financial statement as a percentage of a base figure (like total assets or total revenue), allowing for easier comparison.

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

Which of the following is/are objective of common-size income statement?

  1. To analyse change in individual items of statement of Profit and Loss.

  2. To study the trend in different items of Revenues and Expenses.

  3. To assess the efficiency.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Common-size income statements are used to analyze changes in individual items, study trends in revenues and expenses, and assess the overall efficiency of the business operations.

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

Common-size Balance Sheet shows _______________.

  1. Assets, Equity and Liabilities in absolute values.

  2. Assets and Liabilities as percentage of total assets or total equity and liabilities.

  3. Both (a) and (b)

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A common-size balance sheet expresses all items as a percentage of a common base, typically total assets or total equity and liabilities. This allows for easier comparison between companies of different sizes or over different time periods.

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

Common-size Income Statement is the vertical analysis of Income Statement.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. Common-size Income statement is the vertical analysis of Income Statement. A vertical analysis is shows all items as percentages and not in absolute figures which provides better comparison. Each line item is expressed as a percentage figure of the base figure within the statement. 

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

Objectives of common-size income statement is/are ________________.

  1. To analyse change in individual items of statement of profit and loss.

  2. To study the trend in different items of revenues and expenses.

  3. To assess the efficiency.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Objectives of common-size income statement are to analyse change in individual items of statement of profit and loss, to study the trend in different items of revenues and expenses and to assess the efficiency of the enterprise. 

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

'To determine the trend of different items of statement', is one of the objectives of common-size statements.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. To determine the trend of different items of statement is one of the objectives of common size statements. It measure the relationship of different items of financial statements with a common variable. 

Multiple choice book keeping and accountancy analysis of financial statements preparation of common size statements comparative statements and common-size statements tools of financial statement analysis - comparative and common-size statements

Which of the following statements are true?
a. Common size balance sheet shows relative value of the various items.
b. In the common size income statement, each product is represented as a percentage of the net sales figure.
c. Common size income statements represents the various element as a percentage of the gross profit.

  1. Both (a) and (b)

  2. Both (a) and (c)

  3. Both (b) and (c)

  4. All of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Common size statement, also known as component percentage statement, is a financial tool for studying the key changes and trends in the financial position and operational result of a company. Common size balance sheet shows relative value of the various items. In common size income statement, the item of expenditure are shown as percentage of the net sales.