Which of the following is NOT true of common-size income statements?
A) Each income statement item is standardized by dividing it by total assets.
B) Income statement accounts are represented as percentages of net sales.
C) Each income statement item is standardized by dividing it by net sales.
D) Common-size income statements analysis is a specialized application of ratio analysis.

Question

Quizplus · Accepted Answer

Common-size income statements standardize each income statement item by dividing it by net sales, not total assets. Option A incorrectly states that each item is divided by total assets instead of net sales.

Which of the Following Is NOT True of Common-Size Income