Indicate whether each of the following statements is true or false.________ a)A common size income statement facilitates comparison between two or more companies of different size and in the same industry.________ b)A common size income statement is prepared by dividing the various amounts reported on the income statement by the amount of total assets.________ c)A common size income statement is helpful in comparing the results of operation in different time periods.________ d)The gross margin percentage is computed by dividing gross margin by net income.________ e)Return on sales is computed by dividing net income by net sales.

Question

Quizplus · Accepted Answer

b)False c)True d)False e)Ta)This is true. Common size income statements are helpful in comparing companies of different size in the same industry.b)This is false. A common size income statement is prepared by dividing elements by sales, not total assets.c)This is true. Common size income statements are helpful in comparing different time periods.d)This is false. Gross margin percentage is calculated as gross margin divided by sales.e)This is true. Return on sales is computed by dividing net income by net sales.

Indicate Whether Each of the Following Statements Is True or False.________