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When combining common-size and common-base year analysis, the effect of overall growth in assets can be eliminated by first forming the <u>common size statements.</u>
<h3>What is a common size statement?</h3>
An income statement with each line item expressed as a percentage of revenue or sales is referred to as a common size income statement. The usual size percentages assist in demonstrating the impact of each line item or component on the company's financial status.
Items are shown as a percentage of a common base amount, such as total sales revenue, in a financial statement of common size. This kind of financial statement makes it simple to compare one company to another or different time periods within the same company. You need to make some sort of size adjustment in order to compare those two businesses. Common-size financial statements are used for this.
Therefore, common size statement can eliminate the effect of overall growth in assets.
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Answer: I am sorry, you should try adding an image of the question and/or the question it's self.
Explanation:
Answer:
The correct answer to the following question will be "construct under-representation".
Explanation:
- CU arises whenever the test undermines legitimacy even though the contents of the review do not demonstrate relevant qualifications or knowledge.
- This is a consistency hazard which often means an examination has become too small and does not include essential aspects or features of that same defined structure.
Therefore, it's the right answer.
