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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]3 years ago
3 0

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.

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