Express the items in common-size percents.
Current YearPrior Year
Accounts receivable
$8,190
$8,750
Equipment, net
Land
55,500 18,900
45,500 42,400
Total assets
96,240 69,000
$205,430 $139,050
Cash
Current YearPrior Year
%
%
%
%
%
%
Cash
Accounts receivable %
Equipment, net
Land
Total assets
%
%
%<\/p>\n\n\n\n
The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n To express the items as common-size percentages, you need to calculate each account as a percentage of total assets for both the current and prior years.<\/p>\n\n\n\n The formula for calculating the common-size percentage is:<\/p>\n\n\n\n [ Common-size analysis helps in comparing financial statements over different periods or across companies, as it normalizes financial data by expressing each item as a percentage of total assets. This makes it easier to identify trends, such as the increase or decrease in specific assets over time, regardless of the size of the company.<\/p>\n\n\n\n For instance, you can see that in the current year, cash has decreased significantly as a percentage of total assets (from 6.29% in the prior year to 3.99%). Equipment, net has increased as a percentage of total assets (from 32.74% to 27.03%), while land has decreased sharply in percentage terms, from 30.53% to 9.20%. This indicates a significant shift in asset composition, where the company might have invested less in land or divested part of it, while investing more in equipment.<\/p>\n\n\n\n The common-size approach provides a clear view of how each category of assets relates to the company\u2019s overall asset base, helping investors, analysts, and management to evaluate performance and make informed decisions.<\/p>\n","protected":false},"excerpt":{"rendered":" Express the items in common-size percents.Current YearPrior YearAccounts receivable$8,190$8,750Equipment, netLand55,500 18,90045,500 42,400Total assets96,240 69,000$205,430 $139,050CashCurrent YearPrior Year%%%%%%CashAccounts receivable %Equipment, netLandTotal assets%%% The Correct Answer and Explanation is : To express the items as common-size percentages, you need to calculate each account as a percentage of total assets for both the current and prior years. The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-190513","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/190513","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=190513"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/190513\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=190513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=190513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=190513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\\text{Common-Size Percentage} = \\frac{\\text{Account Balance}}{\\text{Total Assets}} \\times 100
]<\/p>\n\n\n\nCurrent Year Calculation<\/strong><\/h3>\n\n\n\n
\n
[
\\frac{\\$8,190}{\\$205,430} \\times 100 = 3.99\\%
]<\/li>\n\n\n\n
[
\\frac{\\$8,750}{\\$205,430} \\times 100 = 4.26\\%
]<\/li>\n\n\n\n
[
\\frac{\\$55,500}{\\$205,430} \\times 100 = 27.03\\%
]<\/li>\n\n\n\n
[
\\frac{\\$18,900}{\\$205,430} \\times 100 = 9.20\\%
]<\/li>\n\n\n\n
[
\\frac{\\$205,430}{\\$205,430} \\times 100 = 100\\%
]<\/li>\n<\/ul>\n\n\n\nPrior Year Calculation<\/strong><\/h3>\n\n\n\n
\n
[
\\frac{\\$8,750}{\\$139,050} \\times 100 = 6.29\\%
]<\/li>\n\n\n\n
[
\\frac{\\$8,190}{\\$139,050} \\times 100 = 5.90\\%
]<\/li>\n\n\n\n
[
\\frac{\\$45,500}{\\$139,050} \\times 100 = 32.74\\%
]<\/li>\n\n\n\n
[
\\frac{\\$42,400}{\\$139,050} \\times 100 = 30.53\\%
]<\/li>\n\n\n\n
[
\\frac{\\$139,050}{\\$139,050} \\times 100 = 100\\%
]<\/li>\n<\/ul>\n\n\n\nSummary of Common-Size Percentages<\/strong><\/h3>\n\n\n\n
Current Year<\/strong><\/h4>\n\n\n\n
\n
Prior Year<\/strong><\/h4>\n\n\n\n
\n
Explanation:<\/strong><\/h3>\n\n\n\n