Computation of percentage for other income
\(\cfrac { 20,000 }{ 5,00,000 } \times 100=4%\)%

Common-size statement can be prepared with three columns. Following are the steps to be followed in preparation of common-size statement:
(i) Column 1: In this column, particulars of items of income statement or balance sheet are written.
(ii) Column 2: Enter absolute amount.
(iii) Column 3: Choose a common base as 100. For example, revenue from operations can be taken as the base for income statement and total of balance sheet can be taken as the base for balance sheet. Work out the percentage for all the items of column 2 in terms of the common base and enter them in column 3.
Format of common-size statement:

A comparative statement has five columns. Following are the steps to be followed in preparation of the comparative statement.
(i) Column 1: In this column, particulars of items of income statement or balance sheet are written.
(ii) Column 2: Enter absolute amount of year 1
(iii) Column 3: Enter absolute amount of year 2
(iv) 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 decrease put minus sign.
(v) 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
\(\frac{Absolute \ amount \ of \ increase \ or \ decrease}{Year \ 1 \ amount}\times100\)
Format of comparative statement:

(i) Give only interim reports:
Financial statements are prepared at the end of every accounting period. But the actual position of the business can be known only when the business is closed.
(ii) LImited access to external users:
The external users do not have detailed and frequent information of financial results as they have limited access
(iii) Influenced by personal judgement:
Preparation of financial statements may be influenced by personal judgements and therefore these are not free from bias.

(i) Cash flow analysis is concerned with preparation of cash flow statement which shows the inflow and outflow of cash and cash equivalents in a given period of time.
(ii) Cash includes cash in hand and demand deposits with banks.
(iii) Cash equivalents denote short term investments which can be realised easily within a short period of time, without much loss in value.
(iv) Cash flow analysis helps in assessing the liquidity and solvency of a business concern

The nature of financial statement is historical. Past cannot be the index of future and cannot be cent percent basisi for future estimation forecasting budgeting and planning.