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}, , -5 Comparative Statements, , 3. *What are comparative financial statements?, , Analysis of Financial Statement,, , 2 Marks, , - and the balance sheet prepar, i i , atame - profit and loss and edb, .ns: Comparative financial statements refer to the statement of Re ee previa vear and ma, idi ) , oes ear ¢£ > as I¢, sroviding columns for the figures for both the current year as well as §, during the year, both in absolute and relative terms. ‘sa, ar, 14. What is Horizontal analysis? Srl aha, $ , Sage sd as ho 4 al alle SIS., Ans: Analysis of financial statements in a comparative form is called as “ie, 15. State the importance of comparative statements. eee iets senna, Ans: (1) They show the profitability and financial position of a firm 10, comparative firm. oe, 3 ‘ ition ¢ erating results., (2) They indicate the trend and direction of financial position and op g, Preparation of Comparative Statements:, i ements., The following steps may be followed to prepare the comparative stat : —, i i i wn 0 ok, Step 1: List out absolute figures in rupees relating to two points of time (as sho xhibit, 4.1), i i the second year, Step 2: Find out change in absolute figures by subtracting the first ve (Col. 2) from year (Col. 3) ang, indicate the change as increase (+) or decrease (-) and put it column 4. d, it in column 9., Step 3: Preferably, also calculate the percentage change as follows and put it in ¢, , Absolute Increase or Decrease (Col.4) 100, First year absolute figure (Col.2), , , , , (Exhibit 4.1), , , , , , , , , , , , , , , , Percentage, increase (+) or, decrease (—), , Absolute increase, , , , , Particulars First Year | Second Year, , (+) or Decrease (-), , , , 16. Give the formula for percentage change in comparative statements., , : : Absolute increase or decrease, Ans: Percentage change in comparative statement = OE hO, , First year absolute figure, 17. Give the absolute increase and percentage increase for the following:, , , , , , Previous year | Current Year, , s0,000 | __75,000, , Ans: (i) Absolute increase = Current year amount — Previous year amount, = 75,000 — 60,000, = Rs. 15,000, (ii) Percentage increase = - Aso ite Inciease, Previous year absolute amount, _ 15,000 ., 60,000, , , , x 100, , 100, , = 25%, , », , Student's illuminator