Which of the following are correct in connection with a Common Size Statement?(A) Expressed as a percentage on revenue from operation(B) Horizontal analysis(C) Vertical analysis(D) Expressed as a percentage on total assets Choose the correct answer from the options given below:
- A(A), (B) and (D) only
- B(A), (B) and (C) only
- C(A), (C) and (D) only
- D(B), (C) and (D) only
Solution & Step-by-step Explanation
A Common Size Statement is a tool for vertical analysis (C) where item rows are computed as vertical percentages relative to a baseline figure within a single period. In the Common Size Income Statement, the baseline is Revenue from Operations (A).In the Common Size Balance Sheet, the baseline is Total Liabilities or Total Assets (D).Statement (B) is incorrect because horizontal analysis applies to Comparative Statements. Thus, statements (A), (C), and (D) are correct.