Q1: 1. What is the formula to calculate common size percentages for an income statement?

• A) Item amount / Total assets
• B) Item amount / Total liabilities
• C) Item amount / Total revenue
• D) Item amount / Total expenses

Q2: 2. In a common size balance sheet, what does the common size percentage for an asset represent?

• A) Its proportion to total equity
• B) Its proportion to total liabilities
• C) Its proportion to total assets
• D) Its proportion to total revenue

Q3: 3. If a company has total revenue of $500,000 and cost of goods sold of $300,000, what would be the common size percentage for cost of goods sold?

• A) 40%
• B) 60%
• C) 20%
• D) 30%

Q4: 4. Which financial statement provides a snapshot of a company's financial position at a specific point in time?

• A) Income statement
• B) Cash flow statement
• C) Common size statement
• D) Balance sheet

Q5: 5. If a company's total assets are $1,000,000 and total liabilities are $400,000, what would be the common size percentage for total liabilities?

• A) 25%
• B) 40%
• C) 60%
• D) 40%

Q6: 6. Common size statements are useful for comparing companies of different sizes or within the same company over different periods of time. True or False?

• A) True
• B) False
• C) Sometimes true
• D) None of the above

Q7: 7. In a common size income statement, which item would typically have the highest percentage?

• A) Net income
• B) Cost of goods sold
• C) Revenue
• D) Operating expenses

Q8: 8. If a company's total equity is $300,000 and total assets are $600,000, what would be the common size percentage for total equity?

• A) 50%
• B) 100%
• C) 25%
• D) 200%

Q9: 9. Which financial statement shows a company's profitability over a period of time?

• A) Balance sheet
• B) Income statement
• C) Cash flow statement
• D) Common size statement

Q10: 10. If a company's total revenue is $1,000,000 and net income is $200,000, what would be the common size percentage for net income?

• A) 20%
• B) 50%
• C) 25%
• D) 10%

Q11: 11. Common size statements are expressed in percentages rather than dollar amounts. True or False?

• A) True
• B) False
• C) Sometimes true
• D) None of the above

Q12: 12. Which of the following is not a common size financial statement?

• A) Common size income statement
• B) Common size balance sheet
• C) Common size cash flow statement
• D) Common size statement of changes in equity

Q13: 13. If a company's total expenses are $400,000 and total revenue is $800,000, what would be the common size percentage for total expenses?

• A) 50%
• B) 25%
• C) 40%
• D) 20%

Q14: 14. Common size analysis helps in identifying trends and patterns in a company's financial performance. True or False?

• A) True
• B) False
• C) Sometimes true
• D) None of the above

Q15: 15. If a company's total assets are $1,500,000 and total liabilities are $600,000, what would be the common size percentage for total assets?

• A) 40%
• B) 60%
• C) 25%
• D) 50%

Q16: 16. Which of the following is a key benefit of using common size financial statements?

• A) Provides absolute values only
• B) Makes it difficult to compare companies
• C) Standardizes financial information for easy comparison
• D) Requires complex calculations

Q17: 17. In a common size income statement, which item represents profitability?

• A) Revenue
• B) Net income
• C) Cost of goods sold
• D) Operating expenses

Q18: 18. If a company's total equity is $400,000 and total assets are $800,000, what would be the common size percentage for total equity?

• A) 50%
• B) 25%
• C) 100%
• D) 200%

Q19: 19. Which financial statement provides information on a company's cash flow activities?

• A) Income statement
• B) Balance sheet
• C) Cash flow statement
• D) Common size statement

Q20: 20. If a company's total revenue is $600,000 and operating expenses are $300,000, what would be the common size percentage for operating expenses?

• A) 50%
• B) 25%
• C) 40%
• D) 30%

Q21: 21. Common size statements help in comparing companies in different industries on an equal basis. True or False?

• A) True
• B) False
• C) Sometimes true
• D) None of the above

Q22: 22. In a common size balance sheet, which item typically has the highest percentage?

• A) Total assets
• B) Total liabilities
• C) Total equity
• D) Retained earnings

Q23: 23. If a company's total liabilities are $200,000 and total assets are $1,000,000, what would be the common size percentage for total liabilities?

• A) 20%
• B) 50%
• C) 25%
• D) 10%

Q24: 24. Common size statements are particularly useful for external financial reporting. True or False?

• A) True
• B) False
• C) Sometimes true
• D) None of the above

Q25: 25. If a company's total revenue is $700,000 and net income is $140,000, what would be the common size percentage for net income?

• A) 20%
• B) 25%
• C) 30%
• D) 15%