Introduction Comparative Statement & Format of Comparative Balance Sheet | Crash Course of Accountancy - Class 12 - Commerce PDF Download

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Chapter 3 
Tools of Financial Analysis –Comparative Statements 
 
MEANING OF COMPARATIVE STATEMENTS 
Comparative Statements or Comparative Financial Statements mean a comparative study of items or components of 
financial statements (Balance Sheet and Statement of Profit and Loss) for two or more years. 
 
OBJECTIVES OR PURPOSE OR UTILITY OF COMPARATIVE STATEMENTS 
The followings are main objectives of comparative statements: 
1. To make data simpler and understandable:  
2. To indicate the trend 
3. To help in forecasting 
4. To indicates strengths and weaknesses 
5. To facilitate Inter-firm comparison 
 
LIMITATIONS OF COMPARATIVE STATEMENTS 
1. Ignores Price-level Changes:  
2. Historical Information 
3. Ignores Qualitative Aspects 
4. Affected by  Personal Bias 
5. Variation in Accounting Policies. 
 
COMPARATIVE BALANCE SHEET 
Comparative Balance Sheet is the analysis of Balance Sheet which is used for comparing Assets and Liabilities horizontally 
for two or more accounting periods. 
 
Advantages of Comparative Balance Sheet 
1. Comparative Balance Sheet shows the increase or decrease in various items of Balance Sheet as compared to single 
year's Balance Sheet, which shows the balances of accounts at a certain date. 
 
2. Comparative Balance Sheet emphasis on showing the change in financial variables, whereas, in a single Balance Sheet, 
the emphasis is just on status. 
 
3. Comparative Balance Sheet is more useful as compared to single year's balance sheet as it enables to study the nature, 
size and direction of increase or decrease in various items of Balance Sheet. 
 
4. Comparative Balance Sheet acts as a connecting link between statement of Profit and Loss and the Balance Sheet as it 
shows the effect of business operation on its assets, liabilities and capital. 
 
Format of Comparative Balance Sheet 
COMPARATIVE BALANCE SHEET 
as at.... 
Particulars Note No. Previous 
Year 
Current 
Year 
Absolute Change 
(Increase/Decrease) 
Percentage Change 
(increase/Decrease) 
% 
  (Rs.) (Rs.) (Rs.)  
  A B (C-B-A) (D = C/A × 100) 
I. EQUITY AND LIABILITIES      
1. Shareholders' Funds  .... .... .... .... 
(a) Share Capital  .... .... .... .... 
(b) Reserves and Surplus  .... .... .... .... 
2. Non-Current Liabilities  .... .... .... .... 
(a) Long-term Borrowings  .... .... .... .... 
(b) Long-term Provisions  .... .... .... .... 
3. Current Liabilities  .... .... .... .... 
(a) Short-term Borrowings  .... .... .... .... 
(b) Trade Payables  .... .... .... .... 
Page 2


 
    
 
Chapter 3 
Tools of Financial Analysis –Comparative Statements 
 
MEANING OF COMPARATIVE STATEMENTS 
Comparative Statements or Comparative Financial Statements mean a comparative study of items or components of 
financial statements (Balance Sheet and Statement of Profit and Loss) for two or more years. 
 
OBJECTIVES OR PURPOSE OR UTILITY OF COMPARATIVE STATEMENTS 
The followings are main objectives of comparative statements: 
1. To make data simpler and understandable:  
2. To indicate the trend 
3. To help in forecasting 
4. To indicates strengths and weaknesses 
5. To facilitate Inter-firm comparison 
 
LIMITATIONS OF COMPARATIVE STATEMENTS 
1. Ignores Price-level Changes:  
2. Historical Information 
3. Ignores Qualitative Aspects 
4. Affected by  Personal Bias 
5. Variation in Accounting Policies. 
 
COMPARATIVE BALANCE SHEET 
Comparative Balance Sheet is the analysis of Balance Sheet which is used for comparing Assets and Liabilities horizontally 
for two or more accounting periods. 
 
Advantages of Comparative Balance Sheet 
1. Comparative Balance Sheet shows the increase or decrease in various items of Balance Sheet as compared to single 
year's Balance Sheet, which shows the balances of accounts at a certain date. 
 
2. Comparative Balance Sheet emphasis on showing the change in financial variables, whereas, in a single Balance Sheet, 
the emphasis is just on status. 
 
3. Comparative Balance Sheet is more useful as compared to single year's balance sheet as it enables to study the nature, 
size and direction of increase or decrease in various items of Balance Sheet. 
 
4. Comparative Balance Sheet acts as a connecting link between statement of Profit and Loss and the Balance Sheet as it 
shows the effect of business operation on its assets, liabilities and capital. 
 
Format of Comparative Balance Sheet 
COMPARATIVE BALANCE SHEET 
as at.... 
Particulars Note No. Previous 
Year 
Current 
Year 
Absolute Change 
(Increase/Decrease) 
Percentage Change 
(increase/Decrease) 
% 
  (Rs.) (Rs.) (Rs.)  
  A B (C-B-A) (D = C/A × 100) 
I. EQUITY AND LIABILITIES      
1. Shareholders' Funds  .... .... .... .... 
(a) Share Capital  .... .... .... .... 
(b) Reserves and Surplus  .... .... .... .... 
2. Non-Current Liabilities  .... .... .... .... 
(a) Long-term Borrowings  .... .... .... .... 
(b) Long-term Provisions  .... .... .... .... 
3. Current Liabilities  .... .... .... .... 
(a) Short-term Borrowings  .... .... .... .... 
(b) Trade Payables  .... .... .... .... 
 
    
 
(c) Other Current Liabilities  .... .... .... .... 
(d) Short-term Provisions  .... .... .... .... 
Total  .... .... .... .... 
II. ASSETS      
1. Non-Current Assets  .... .... .... .... 
(a) Fixed Assets  .... .... .... .... 
(i) Tangible Assets  .... .... .... .... 
(ii) Intangible Assets  .... .... .... .... 
(b) Non-Current Investments  .... .... .... .... 
(c) Long-term Loans and Advances  .... .... .... .... 
2. Current Assets      
(a) Current Investments  .... .... .... .... 
(b) Inventories  .... .... .... .... 
(c) Trade Receivables  .... .... .... .... 
(d) Cash and Cash Equivalents  .... .... .... .... 
(e) Short-term Loan and Advances  .... .... .... .... 
(f) Other Current Assets  .... .... .... .... 
Total  .... .... .... .... 
 
 
COMPARATIVE STATEMENT OF PROFIT AND LOSS 
Statement of Profit and Loss (Income Statement) shows the net profit or net loss of an enterprise during the year. 
Comparative Statement of Profit and Loss shows the operating results for more than one accounting period so that 
changes in absolute amounts as well as in terms of percentages may be known. 
 
Objectives of Comparative Statement of Profit and Loss 
The main objectives are: 
(i) To analyse the income and expenditure of two or more years. 
(ii) To measure the increase or decrease in the income and expenditure in terms of rupees as well as in percentage. 
(iii) To study the effect of business operations of the last year on the current year's operation. 
 
Format of Comparative Statement of Profit and Loss 
COMPARATIVE STATEMENT OF PROFIT AND LOSS as at.... 
Particulars Note Previous Current Absolute Change Percentage 
 No Year Year (Increase/ Change (Increase/ 
    Decrease) Decrease) 
  (Rs.) (Rs.) (Rs.) % 
I. Revenue from Operations  .... .... .... .... 
II. Other Income  .... .... .... .... 
III. Total Revenue (I + II)  .... .... .... .... 
Expenses      
(a) Cost of Materials Consumed  .... .... .... .... 
(b) Purchases of stock-in-Trade  .... .... .... .... 
(c) Changes in Inventories of  .... .... .... .... 
Finished Goods, Work-in-      
Progress and Stock-in-Trade      
(d) Employees Benefit Expenses  .... .... .... .... 
(e) Finance Costs  .... .... .... .... 
(f) Depreciation and Amortisation  .... .... .... .... 
Expenses      
(g) Other Expenses  .... .... .... .... 
IV. Total Expenses  .... .... .... .... 
V Profit before Tax (III – IV)  .... .... .... .... 
Less: Tax  .... .... .... .... 
VI Profit after Tax  .... .... .... ....