Trend statements often provide a clearer indication of growth and decline than do common size statements.

Question

Quizplus · Accepted Answer

Trend statements track the change in financial data over time, making it easier to spot trends and identify growth or decline patterns. Common size statements, on the other hand, show the relative importance of each item on a financial statement, but do not show the change over time. Therefore, trend statements are more useful in predicting future performance than common size statements.

Trend Statements Often Provide a Clearer Indication of Growth and Decline