The document provides information on comparative financial statement analysis including examples of comparative income statements for two companies. The first example compares the income statement of a company for the years ending December 31, 2019 and 2020. It shows increases in most line items including net sales, cost of sales, expenses and profit. The second example compares the income statement of another company for 2019 and 2020. It also shows increases in most line items, including revenue, expenses and profit, with the exception of other income and finance costs which decreased. Percentage increases and decreases are also provided. The document concludes with an illustration showing how to calculate sales figures for a comparative income statement based on given cost of sales and profit margin information for two

1. MANAGEMENTACCOUNTING
FinancialAnalysis and Interpretation :
Comparative Financial StatementAnalysis
Problems 1
By:
Smt.UMA MINAJIGI REUR
HEAD, DEPT. OF COMMERCE & Management
Smt. V G Degree College for Women, Kalaburagi

2. MANAGEMENT
ACCOUNTING
B.COM SIXTH SEMESTER
&
BBA FOURTH SEMESTER
6.3: PRINCIPLES OF MANAGEMENT ACCOUNTING

3. Unit II : Financial Statements :
• Nature, uses and limitations.
• Analysis and interpretations – meaning,
procedure, objectives, and importance.
• Comparative statement,
• Common Size Statements and
• Trend Analysis - practical problems.

4. MANAGEMENTACCOUNTING
FinancialAnalysis and Interpretation :
Comparative Financial StatementAnalysis
Comparative Income Statement
Problems 1

5. Particulars 31-12-2019
(Rs.)
31-12-2020
(Rs.)
Net Sales 3,92,500 4,50,000
Cost of sales 2,25,000 2,50,000
General & Administrative expenses 35,000 36,000
Selling expenses 40,000 45,000
Interest paid 12,500 15,000
Income Tax 35,000 40,000
Illustration 1:
From the following information rearrange the figures in a comparative form and
explain the profitability position of the concern.

6. Solution:
Comparative Income Statement
For the year ended 31st Dec, 2019 and 2020
Particulars 31-12-2019
(Rs.)
31-12-2020
(Rs.)
Increase or
Decrease in
amount
Increase or
Decrease in
percentage %

7. Solution:
Comparative Income Statement
For the year ended 31st Dec, 2019 and 2020
Particulars 31-12-2019
(Rs.)
31-12-2020
(Rs.)
Increase or
Decrease in
amount
Increase or
Decrease in
percentage %
I. Continuing operations
1. Revenue from operations
(Sales)
3,92,500 4,50,000
Total Revenue (A) 3,92,500 4,50,000
2. Expenses
Cost of sales 2,25,000 2,50,000
Finance Cost
Interest Paid 12,500 15,000
Other Expenses
Selling & Distribution expenses 35,000 36,000
General expenses 40,000 45,000
Total Expenses (B) 3,12,500 3,46,000
Profit Before Tax (A-B) 80,000 1,04,000
Less: Income Tax 35,000 40,000
Profit After Tax 45,000 64,000
Particulars 31-12-2019
(Rs.)
31-12-2020
(Rs.)
Net Sales 3,92,500 4,50,000
Cost of sales 2,25,000 2,50,000
Gen & Adm
expenses
35,000 36,000
Selling
expenses
40,000 45,000
Interest paid 12,500 15,000
IncomeTax 35,000 40,000

8. Solution:
Comparative Income Statement
For the year ended 31st Dec, 2019 and 2020
Particulars 31-12-2019
(Rs.)
31-12-2020
(Rs.)
Increase or
Decrease in
amount
Increase or
Decrease in
percentage %
I. Continuing operations
1. Revenue from operations
(Sales)
3,92,500 4,50,000 +57,500
Total Revenue (A) 3,92,500 4,50,000 +57,500
2. Expenses
Cost of sales 2,25,000 2,50,000 +25,000
Finance Cost
Interest Paid 12,500 15,000 +2,500
Other Expenses
Selling & Distribution expenses 35,000 36,000 +1,000
General expenses 40,000 45,000 +5,000
Total Expenses (B) 3,12,500 3,46,000 +33,500
Profit Before Tax (A-B) 80,000 1,04,000 +24,000
Less: Income Tax 35,000 40,000 +5,000
Profit After Tax 45,000 64,000 +19,000
= 4,50,000 - 392500
= 4,50,000 - 392500
= 250000 - 225000
= 15000 - 125000
= 36000 – 35000
= 45000 - 40000
= 346000 - 312500
= 104000 – 80000
= 40000 – 35000
= 64000 - 45000

9. Solution:
Comparative Income Statement
For the year ended 31st Dec, 2019 and 2020
Particulars 31-12-2019
(Rs.)
31-12-2020
(Rs.)
Increase or
Decrease in
amount
Increase or
Decrease in
percentage %
I. Continuing operations
1. Revenue from operations
(Sales)
3,92,500 4,50,000 +57,500 +14.65
Total Revenue (A) 3,92,500 4,50,000 +57,500 +14.65
2. Expenses
Cost of sales 2,25,000 2,50,000 +25,000 +11.11
Finance Cost
Interest Paid 12,500 15,000 +2,500 +20.00
Other Expenses
Selling & Distribution expenses 35,000 36,000 +1,000 +2.86
General expenses 40,000 45,000 +5,000 +12.50
Total Expenses (B) 3,12,500 3,46,000 +33,500 +10.72
Profit Before Tax (A-B) 80,000 1,04,000 +24,000 +30.00
Less: Income Tax 35,000 40,000 +5,000 +14.29
Profit After Tax 45,000 64,000 +19,000 +42.22

10. Calculation of percentages:
Percentage =
Increase or decrease amount in current year
X 100
Last year amount
Sales =
Net increase in sales in 2020
X 100
Last year Sales (2019)
=
57,500
X 100 = 14.65%
3,92,500
Cost of Sales =
Net increase incost of sales in 2020
X 100
Last year cost of Sales (2019)
=
25,000
X 100 = 11.11%
2,25,000

11. Calculation of percentages:
Percentage =
Increase or decrease amount in current year
X 100
Last year amount
Interest Paid =
Net increase in Int Paid in 2020
X 100
Last year Int Paid (2019)
=
2,500
X 100 = 20%
12,500
S & D Exp =
Net increase in S & D Exp in 2020
X 100
Last year S & D Exp (2019)
=
1,000
X 100 = 2.86%
35,000

12. Calculation of percentages:
Percentage =
Increase or decrease amount in current year
X 100
Last year amount
Gen Exp =
Net increase in Gen Exp in 2020
X 100
Last year Gen Exp (2019)
=
5,000
X 100 = 12.50%
40,000
Income Tax =
Net increase in Income Tax in 2020
X 100
Last year Income Tax (2019)
=
5,000
X 100 = 14.29%
35,000

13. Illustration 2:
The following is the profit and loss account of Hubli Ltd. For the year 2020 and its previous year.
Profit & Loss A/c
As on 31st Dec, 2019 and 2020
Particulars 31-12-2019 31-12-2020
Amount Amount Amount Amount
I. Continuing operations
1. Revenue from operations 14,19,736 16,40,694
2. Other income 22,090 12,824
Total Revenue 14,41,826 16,53,518
3. Expenses
Cost of Sales 9,26,500 9,67,798
Finance Cost 8,550 7,000
Other Expenses 2,89,216 3,40,238
Profit before tax 2,17,560 3,38,482
4. Less: Tax expenses 86,076 1,60,780
Profit after Tax 1,31,484 1,77,702

14. Notes to Accounts
Particulars 31-12-2019 31-12-2020
Amount Amount Amount Amount
1. Revenue from operations
By, Sales 14,42,912 16,68,500
Less: Returns 23,176 14,19,736 27,806 16,40,694
2. Other income
Dividends 7,590 5,240
Purchase discount 8,500 7,584
Profit on sale of land 6,000 22,090 12,824
3. Cost of Sales 9,26,500 9,67,798
4. Finance Cost
Interest Paid 8,550 7,000
5. Other Expenses
Adm exp 93,062 1,08,274
Selling exp. 1,93,646 2,31,264
Loss on sale of fixed assets 2,508 12,24,266 700 13,15,036
Tax expenses 86,076 1,60,780
Profit after Tax 1,31,484 1,77,702

15. Illustration 2:
Solution:
Comparative Income Statement
As on 31st Dec, 2019 and 2020
Particulars 31-12-2019 31-12-2020 Increase or
Decrease in
amount
Increase or
Decrease in
percentage
%

16. Illustration 2:
Solution:
Comparative Income Statement
As on 31st Dec, 2019 and 2020
Particulars 31-12-2019 31-12-2020 Increase or
Decrease in
amount
Increase or
Decrease in
percentage
%
I. Continuing operations
1. Revenue from operations 14,19,736 16,40,694
2. Other income 22,090 12,824
Total Revenue (A) 14,41,826 16,53,518
3. Less: Expenses
Cost of Sales 9,26,500 9,67,798
Finance Cost 8,550 7,000
Other Expenses 2,89,216 3,40,238
Total Expenses (B) 12,24,266 13,15,036
Profit before tax (A-B) 2,17,560 3,38,482
4. Less: Tax expenses 86,076 1,60,780
Profit after Tax 1,31,484 1,77,702
Particulars 31-12-2019 31-12-2020
Amount Amount Amount Amount
I. Continuing operations
1. Revenue from
operations
14,19,736 16,40,694
2. Other income 22,090 12,824
Total Revenue 14,41,826 16,53,51
8
3. Expenses
Cost of Sales 9,26,500 9,67,798
Finance Cost 8,550 7,000
Other Expenses 2,89,216 3,40,238
Profit before tax 2,17,560 3,38,48
2
4. Less: Tax expenses 86,076 1,60,780
Profit after Tax 1,31,484 1,77,702

17. Illustration 2:
Solution:
Comparative Income Statement
As on 31st Dec, 2019 and 2020
Particulars 31-12-2019 31-12-2020 Increase or
Decrease in
amount
Increase or
Decrease in
percentage
%
I. Continuing operations
1. Revenue from operations 14,19,736 16,40,694 +2,20,958
2. Other income 22,090 12,824 -9266
Total Revenue (A) 14,41,826 16,53,518 +2,11,692
3. Less: Expenses
Cost of Sales 9,26,500 9,67,798 +41,298
Finance Cost 8,550 7,000 -1,550
Other Expenses 2,89,216 3,40,238 +51,022
Total Expenses (B) 12,24,266 13,15,036 +90,770
Profit before tax (A-B) 2,17,560 3,38,482 +1,20,922
4. Less: Tax expenses 86,076 1,60,780 +74,704
Profit after Tax 1,31,484 1,77,702 +46,218

18. Illustration 2:
Solution:
Comparative Income Statement
As on 31st Dec, 2019 and 2020
Particulars 31-12-2019 31-12-2020 Increase or
Decrease in
amount
Increase or
Decrease in
percentage
%
I. Continuing operations
1. Revenue from operations 14,19,736 16,40,694 +2,20,958 +15.56
2. Other income 22,090 12,824 -9266 -41.94
Total Revenue (A) 14,41,826 16,53,518 +2,11,692 +14.68
3. Less: Expenses
Cost of Sales 9,26,500 9,67,798 +41,298 +4.46
Finance Cost 8,550 7,000 -1,550 -18.13
Other Expenses 2,89,216 3,40,238 +51,022 +17.64
Total Expenses (B) 12,24,266 13,15,036 +90,770 +7.41
Profit before tax (A-B) 2,17,560 3,38,482 +1,20,922 +55.58
4. Less: Tax expenses 86,076 1,60,780 +74,704 +86.79
Profit after Tax 1,31,484 1,77,702 +46,218 +35.15

19. Particulars 31-12-2019 31-12-2020
Sales 120% of cost goods sold 150% of cost goods sold
Cost of sales Rs. 10,00,000 Rs. 12,50,000
Indirect expenses 10% of Gross Profit 10% of Gross Profit
Rate of Income Tax 50% of Net Profit before
tax
50% of Net Profit before
tax
Illustration 3:
From the following information prepare a comparative income statement of Vinayak Ltd.

20. =
20
X 10,00,000 = 2,00,000
100
=
50
X 12,50,000 = 6,25,000
100
Solution:
Calculation of Sales:
2019:
Sales 120% of cost of goods sold
Cost + Profit 20% on cost
100 + 20 = 120
If cost 100 ------------------- profit 20
If cost 10,00,000 ------------ ?
Sales = Cost + Profit
= 10,00,000 + 2,00,000 = 12,00,000
2020:
Sales 150% of cost of goods sold
Cost + Profit 50% on cost
100 + 50 = 150
If cost 100 ------------------- profit 50
If cost 12,50,000 ------------ ?
Sales = Cost + Profit
= 12,50,000 + 6,25,000 = 18,75,000

21. Thank You
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Problems on Comparative
Balance Sheet