3. A common-size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of: a.) Total assets. b.) Total equity. c.) Net income. d.) Taxable income. e.) Sales.

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10 May, 03:44

3. A common-size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of: a.) Total assets. b.) Total equity. c.) Net income. d.) Taxable income. e.) Sales.

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Victor Mann · Answer 1

Option E Sales

Explanation:

The reason is that the expenses can always be expressed as a percentage of sales rather than expressing it as a percentage of total assets or balance sheet items. This is because many company has millions of dollars investment in plant and equipment but they don't have any profits for the year this means that the sales is more relevant to the expenses than the balance sheet items.