comparative stmnt.pdf

comp stmnt

1. Avneesh Kumar
Assistant Professor of Commerce, Mahatma Gandhi Central University, Motihari
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Financial Statement Analysis
Using Comparative Statements
Unit : 3
Course Code: CMRC4201
Course Title: MANAGEMENT ACCOUNTING
Programme : M.Com.

2. Comparative Financial Statements
•Thecomparativestatementsarethestatementsofthe
financialpositionandperformanceoftwoormoreperiods
representedincomparativeforminadjacentcolumnsina
singlereport.
•Incomparativestatementwecancompareeachelements
offinancialstatementveryeasilyandfind
increase/decreaseintheelementsinabsolutetermsandin
termsofpercentage.
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3. Types of Comparative Statements
•ComparativeBalanceSheets, and
•ComparativeIncomeStatements
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4. Comparative Balance Sheets
•AcomparativestatementofBalanceSheetrepresent
eachelementoftheitemsunderEquity,Liabilitiesand
Assetsofbalancesheetofdifferentperiodsoftime
sidebysideincolumns.Wecaneasilyfindoutthe
increaseordecreaseinthevalueofeachelementof
balancesheetinabsolutefigureaswellasin
percentage.Thereisnoanyprescribedstandardformat
ofcomparativeBalancesheet.
•UsersofFinancialstatementscandevelopatrendline
analysiswiththehelpofcomparativebalancesheet.
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5. Format of Comparative Balance Sheet
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6. Format of Comparative Balance Sheet
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7. Comparative Balance Sheet of ABC Ltd. as on
31-03-2019 & 31-03-2020
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8. Comparative Income Statement
•ThecomparativeIncomestatementrepresentsthe
changesineachelementofincomestatement(Profit&
LossAccount)likerevenue,expenses,costofgoods
sold,etc.ofdifferentperiodsinasinglereportshown
insidebysidecolumns.
•Thestatementshowsthechanges(increaseor
decrease)indifferentelementsofincomestatement
likesales,costofgoodssold,grossprofit,various
expenses,netprofitetc.
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9. Format of Comparative Income Statement
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10. Comparative Income Statement for the years
2019 & 2020
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11. Advantages of Comparative Statements
•It is helpful in comparing inter-firm performance and intra-
firm performance.
•It canbeusedto develop a trend analysis.
•It helps to find out the weak and strong points in different
elements like operating efficiency , financial situation, etc.
•Itisverygoodtoolforfinancialstatementanalysis.
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12. Disadvantages of Comparative Statements
•Ifaccountingprinciplesadoptedormethodofaccountingis
changedandaredifferentfordifferentperiod(e.g.,different
methodofdepreciationfordifferentperiod)thenitisdoesnot
provideareliableorusefulinter-periodcomparisonorinter-
firmcomparisonofperformanceorfinancialposition.
•Theincreaseanddecreaseinabsolutetermsinelementsof
financialstatementforfirmsofverydifferentsizemaynot
leadtousefulcomparativestatements.Forfirmsofvery
differentsizesthechangesshouldbeobtainedinpercentage
termsforinterfirmcomparison.
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