Which one of the following is NOT true of common-size balance sheets?
A) Each asset and liability item on the balance sheet is standardised by dividing it by total assets.
B) Balance sheet accounts are represented as percentages of total assets.
C) Each asset and liability item on the balance sheet is standardised by dividing it by sales.
D) Common-size financial statements allow us to make meaningful comparisons between the financial statements of two companies that are different in size.

Question

Quizplus · Accepted Answer

Common-size balance sheets standardize each asset and liability item by dividing it by total assets, not sales. This allows for easier comparison between balance sheets of companies of different sizes.

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