Question : Which of the following statements is correct?
Option 1: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of Non-current Assets.
Option 2: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of Current Assets.
Option 3: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of Total Assets.
Option 4: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of Non-current liabilities.
Correct Answer: While preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of Total Assets.
Solution : Answer = While preparing a Common-size Balance Sheet, each item of the Balance Sheet is expressed as % of Total Assets.
In a Common-size Balance Sheet, each item is expressed as a percentage of the total assets. This helps in analyzing the relative proportion of each component to the total assets, providing insights into the composition and structure of the company's assets and liabilities in relation to its overall financial position. Each item of Balance Sheet is while preparing Common-size Balance Sheet, each item of Balance Sheet is expressed as % of Total Assets. Hence, the correct option is 3.
Question : Every item of the Balance Sheet is expressed as % of _________ while preparing Common-size Balance Sheet.
Option 1: Non-current Assets
Option 2: Current Assets
Option 3: Total Assets
Option 4: Net sales
Question : The premium on redemption of debenture is shown under which head of the Balance Sheet?
Option 1: Non current liabilities
Option 2: Current liabilities
Option 3: Non current assets
Option 4: Current assets
Question : Which of the following statements is incorrect?
Option 1: Working Capital = Current Assets - Current Liabilities
Option 2: Current Liabilities = Total Assets - Non-Current Liabilities - Shareholder's fund
Option 3: Working Capital = Equity Share Capital + Reserves & Surplus - Long Term Loan - Non-Current Assets
Option 4: None of the above
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