A typical way in which a common-size income statement is constructed is by dividing all expense items in an income statement by

Question

malfutka [58]

3 years ago

6

A typical way in which a common-size income statement is constructed is by dividing all expense items in an income statement by

net income. True False

Business

1 answer:

Ad libitum [116K] · Answer 1 · 2022-03-20T08:58:19+03:00

Answer:

False

Explanation:

A common size income statement is an income statement expressed in percentages. Each line item is expressed as a percentage of total revenue or total sales, not as a percentage of net income.

A common size income statement is used to analyze the relative weight of the company's accounts, e.g. gross margins, net margins, manufacturing expenses relative to total sales, etc.