A common size balance sheet expresses the balance sheet items as a percentage of total assets....

A common size balance sheet expresses the balance sheet items as a percentage of total assets.

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True

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Expert Solution

A common size balance sheet expresses the balance sheet items as a percentage of total assets.

The given statement is true.

While preparing a common size balance sheet, each and every item appearing in the balance sheet is expressed as a percentage of total assets. For finding percentage, a particular item is divided by the total of assets.

Percentage of a particular item = Value of the particular item/Total of assets

For example, inventory is lying in the balance sheet at $10,000 and total of assets is $100,000. Inventory percentage will be calculated as under:

Inventory percentage = Inventory/Total assets

= 10,000/100,000

= 10%

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ekkarill92 answered 2 years ago

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