Question

Vertical analysis is a tool to evaluate individual financial statement items or a group of items in terms of a specific base amount. When analyzing income statement accounts, the base is usually __________ (revenue/expenses/net income) and for balance sheet accounts, the base is usually total ___________ (assets/liabilities/equity) .

Answer 1

Answer:

Revenue is basically the income produced by business operations, and assets are resources with economic value owned by people or organizations which would provide future benefits.

Therefore, when analyzing income statement accounts, the base is usually revenue,  and for balance sheet accounts, the base is usually total assets.