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Question
Explain the steps involved in preparing comparative statements?
Answer in Brief
Solution
Following are the steps to be followed in preparation of the comparative statement:
- Column 1: In this column, particulars of items of the income statement or balance sheet are written.
- Column 2: Enter the absolute amount of year 1.
- Column 3: Enter the absolute amount of year 2.
- Column 4: Show the difference in amounts between year 1 and year 2. If there is an increase in year 2, put plus sign and if there is a decrease put a minus sign.
- Column 5: Show percentage increase or decrease of the difference amount shown in column 4 by dividing the amount shown in column 4 (absolute amount of increase or decrease) by column 2 (year 1 amount).
That is,
Percentage increase or decrease = `"Absolute amount of increase or decrease"/"Year 1 amount" xx 100`
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Preparation of Comparative Statements
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