Which of the following is NOT true of common size statements?
A) All balance sheet figures are expressed as a percentage of shareholders' equity.
B) All figures in the income statement are expressed as a percentage of sales.
C) Common size statements enable trends over time for a single company to be detected.
D) Common size statements assist in comparing companies of different sizes.

Question

Quizplus · Accepted Answer

Common size statements express figures as a percentage of a common base, but in the case of the balance sheet, it can be expressed as a percentage of total assets or liabilities and shareholders' equity. Therefore, not all balance sheet figures are expressed as a percentage of shareholders' equity.

Which of the Following Is NOT True of Common Size