The formula used in preparing a common-size balance sheet is $\begin{array}{|c|l|}
\hline \text{a.} & \frac{\text{Individual Asset Account Balance}}{\text{Total Assets}} \
\hline\text{b.} &\frac{\text{Individual Asset Account Balance}}{\text{Previous Year Account Balance}} \
\hline \text{c.} &\frac{\text{Current Year Account Balance - Previous Year Account Balance}}{\text{Previous Year Account Balance }} \
\hline \text{d.} & \frac{\text{Individual Asset Account Balance}}{\text{Total Assets and Liabilities}} \
\hline

\end{array}$

Question

The formula used in preparing a common-size balance sheet is $\begin{array}{|c|l|}
\hline \text{a.} & \frac{\text{Individual Asset Account Balance}}{\text{Total Assets}} \
 \hline\text{b.} &\frac{\text{Individual Asset Account Balance}}{\text{Previous Year Account Balance}}  \
\hline \text{c.} &\frac{\text{Current Year Account Balance - Previous Year Account Balance}}{\text{Previous Year Account Balance }}  \
\hline \text{d.} & \frac{\text{Individual Asset Account Balance}}{\text{Total Assets and Liabilities}}  \
\hline

\end{array}$

Quizplus · Accepted Answer

A common-size balance sheet expresses each item as a percentage of total assets or total liabilities and equity. The formula used to calculate this is: (Item Amount / Total Assets or Liabilities and Equity) x 100. Therefore, choice A is the correct formula for preparing a common-size balance sheet.

The Formula Used in Preparing a Common-Size Balance Sheet Is