AccountancyCBSE Class 12 · Analysis of Financial Statements

Comparative Statements Class 12: Comparative Balance Sheet and Statement of Profit and Loss

Updated 15 October 2026 · Fact-checked

Comparative statements place a company's figures for two or more years side by side, with the absolute change and the percentage change for each item, using the earlier year as the base. The comparative balance sheet shows changes in position; the comparative statement of profit and loss shows changes in performance. It is called horizontal analysis.

Change is always measured from the previous year: subtract first, then divide by the previous year's figure and multiply by 100.

Illustration drawn for QuestionBuddy.

Understand Comparative Statements

What it is. A comparative statement is a tool of horizontal analysis: the same items are compared across periods to see the direction and size of change.

Absolute change = Current year − Previous year.
Percentage change = Absolute change ÷ Previous year × 100.

Comparative Balance Sheet. Prepared under the Schedule III major heads: Shareholders' Funds, Non-current Liabilities, Current Liabilities and Total; Non-current Assets, Current Assets and Total. It shows how the financial position has moved: growth in assets, sources used (owners or borrowings), and changes in working capital.

Comparative Statement of Profit and Loss. Lines: Revenue from operations, Other income, Total income, Expenses, Profit before tax, Tax, Profit after tax. It shows whether expenses grew faster or slower than revenue and how profit moved.

Objectives and uses. To show the trend and direction of change; to compare a firm with itself over time (intra-firm) or with others (inter-firm); to judge growth, efficiency and liquidity changes; to forecast.

Limitations. Changes in accounting policies or price levels between years can distort comparisons; a large percentage on a tiny base can mislead; it shows what changed, not why.

Reading the result. Look for mismatches: revenue +25% but expenses +30% squeezes margins; current liabilities +50% with current assets −10% weakens liquidity; total assets growing mainly from borrowings raises risk.

Comparative Statements: key facts

Absolute change: Current year − Previous year; Negative means a decrease.
Percentage change: Absolute change ÷ Previous year × 100; Previous year is the base.
Back-working the current year: Previous year × (1 + % change/100)
Back-working the previous year: Current year ÷ (1 + % change/100)

How to answer Comparative Statements questions

Comparative statements are 3-mark questions that reward neat columns and correct bases.

1Draw the columns: particulars, previous year, current year, absolute change, percentage change.
2Compute totals (total income, PBT, PAT; or major-head totals) for both years first.
3Absolute change = current − previous for each line.
4Percentage change = absolute change ÷ previous year × 100, rounded to two decimals.
5For missing figures, back-work from the percentage.
6Add a one-line interpretation if asked.

Comparative Statements in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Percentage change reveals what absolute change hides

Suppose the owner of a stationery store sees that sales went up from ₹4,00,000 to ₹5,00,000 and rent went up from ₹60,000 to ₹90,000. He says, 'Sales rose by ₹1,00,000 and rent only by ₹30,000, so rent is under control.'

Compute the percentage changes and comment on his conclusion.

Try it first, then show the solutionSolution

Sales: 1,00,000 ÷ 4,00,000 × 100 = 25%.
Rent: 30,000 ÷ 60,000 × 100 = 50%.
Rent grew twice as fast as sales.

Answer: Sales rose 25% but rent rose 50%. Although the rupee increase in rent is smaller, it grew much faster than sales, so rent is eating a larger share of revenue; the owner should look into it.

Memory hook: Rupees show size; percentages show speed.

Tricks to remember Comparative Statements

Short memory aids. Say each one aloud once, then use it on a question the same day.

Base is the past
Percentage change always divides by the previous year.
Use it when: Avoiding the most common slip.
Horizontal = across years
Comparative statements read across the row (years); common-size statements read down the column (one year).
Use it when: Distinguishing the two tools.
Compare the speeds
Expenses faster than revenue = margin squeeze.
Use it when: Interpretation.

Comparative Statements: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Percentage change · 1 mark · MCQBoard level

Trade receivables were ₹80,000 in the previous year and ₹1,00,000 in the current year. The percentage change in a comparative balance sheet is:
(a) 20%
(b) 25%
(c) 80%
(d) 125%

Try it first, then show the solutionSolution

Absolute change = 20,000; ÷ 80,000 × 100 = 25%.

Answer: (b) 25%

Example 2: Comparative Statement of Profit and Loss · 3 marks · Short answerBoard level

Prepare a Comparative Statement of Profit and Loss: Revenue from operations ₹10,00,000 (2024-25) and ₹12,50,000 (2025-26); Other income ₹50,000 and ₹40,000; Expenses ₹6,00,000 and ₹7,50,000; tax rate 30%. (3 marks)

Try it first, then show the solutionSolution

Total income: 10,50,000 and 12,90,000 (+2,40,000; 22.86%).
Revenue +2,50,000 (25%); other income −10,000 (−20%); expenses +1,50,000 (25%).
PBT: 4,50,000 and 5,40,000 (+90,000; 20%); tax 1,35,000 and 1,62,000 (+27,000; 20%); PAT 3,15,000 and 3,78,000 (+63,000; 20%).

Answer: PAT rises from ₹3,15,000 to ₹3,78,000, an increase of ₹63,000 or 20%.

Example 3: Comparative Balance Sheet (major heads) · 4 marks · Short answerHarder board level

Prepare a Comparative Balance Sheet from: Shareholders' funds ₹5,00,000 and ₹6,00,000; Non-current liabilities ₹2,00,000 and ₹1,50,000; Current liabilities ₹1,00,000 and ₹1,50,000; Non-current assets ₹5,00,000 and ₹6,30,000; Current assets ₹3,00,000 and ₹2,70,000 (previous and current year). (4 marks)

Try it first, then show the solutionSolution

Shareholders' funds +1,00,000 (20%); non-current liabilities −50,000 (−25%); current liabilities +50,000 (50%).
Total: 8,00,000 → 9,00,000 (+1,00,000; 12.5%).
Non-current assets +1,30,000 (26%); current assets −30,000 (−10%); total 8,00,000 → 9,00,000 (12.5%).

Answer: Both totals rise by ₹1,00,000 (12.5%). Funds came from owners while long-term debt fell; current liabilities rose 50% as current assets fell 10%.

Example 4: Filling gaps · 3 marks · Short answerHarder board level

In a Comparative Balance Sheet: (i) inventories were ₹1,20,000 last year and increased by 25%; (ii) trade payables are ₹90,000 this year after a decrease of 10%. Find the missing figures. (3 marks)

Try it first, then show the solutionSolution

(i) Current year = 1,20,000 × 1.25 = ₹1,50,000.
(ii) Previous year = 90,000 ÷ 0.90 = ₹1,00,000.
Absolute changes: +30,000 and −10,000.

Answer: Inventories this year ₹1,50,000; trade payables last year ₹1,00,000.

Example 5: Interpreting the profit statement · 3 marks · Short answerHOTS / competency

In the Comparative Statement of Profit and Loss above, revenue from operations rose by 25% but profit after tax rose by only 20%. Give two reasons from the data, and one step management could take. (3 marks)

Try it first, then show the solutionSolution

Expenses rose at the same 25% as revenue, so no margin gain arose from operations.
Other income fell by 20%, pulling total income growth down to 22.86%.
PBT and PAT grew 20%; management could cut costs or rebuild other income (for example, invest surplus funds).

Answer: Profit grew more slowly because expenses kept pace with revenue and other income fell; controlling expenses or improving other income would help profit grow faster than sales.

Example 6: Base of the percentage · 1 mark · Assertion-reasonHOTS / competency

Assertion (A): In a comparative statement, percentage change is calculated on the current year's figure.
Reason (R): The previous year's figure is the base for calculating percentage change.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.

Try it first, then show the solutionSolution

The base is the previous year; A is false, R is true.

Answer: (d) A is false, but R is true.

Where students lose marks in Comparative Statements

The slips examiners see most often, and what to write instead.

Mistake: Dividing by the current year
Picking the bigger or later figure.
Wrong working
20,000 ÷ 1,00,000 = 20%.
Right working
20,000 ÷ 80,000 = 25%.
Do this: Always previous year as base.
Usually costs: 1 mark per line.
Mistake: Averaging percentages to get the total's change
Shortcut.
Wrong working
Total change = average of 20%, −25% and 50%.
Right working
Total change = (9,00,000 − 8,00,000) ÷ 8,00,000 = 12.5%.
Do this: Compute totals first, then their change.
Usually costs: 1 mark.
Mistake: Dropping the minus sign
Writing all changes as positive.
Wrong working
Other income change 20%.
Right working
(−)10,000; (−)20%.
Do this: Show decreases with a minus sign or in brackets.
Usually costs: 1/2 mark.
Mistake: Tax on the change instead of on each year's PBT
Skipping the per-year column.
Wrong working
Tax change = 30% of 90,000 only, without year figures.
Right working
Tax each year (1,35,000; 1,62,000), then the change.
Do this: Fill both year columns before the change columns.
Usually costs: 1 mark.

Exam tips

Round percentages to two decimals and keep the sign.
Write total income, PBT and PAT lines even if the question lists only items.
In a comparative balance sheet, use major heads unless sub-heads are asked.
Expect a 3-mark comparative or common-size statement in Part B Option I.

Practice questions on Comparative Statements

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
Comparative statements are an example of:
(a) vertical analysis
(b) horizontal analysis
(c) ratio analysis
(d) cash flow analysis
Hint
Across years.
Answer
(b) horizontal analysis
Q2 · 1 mark · MCQBoard level
Percentage change in a comparative statement is:
(a) absolute change ÷ current year × 100
(b) absolute change ÷ previous year × 100
(c) current year ÷ previous year × 100
(d) absolute change ÷ total assets × 100
Hint
Base year.
Answer
(b) absolute change ÷ previous year × 100
Q3 · 3 marks · Short answerBoard level
Compute the absolute and percentage changes: inventories ₹50,000 → ₹60,000; cash and cash equivalents ₹40,000 → ₹30,000; trade receivables ₹80,000 → ₹1,00,000. (3 marks)
Hint
Three lines.
Answer
Inventories +10,000 (20%); cash −10,000 (−25%); trade receivables +20,000 (25%).
Q4 · 3 marks · Short answerHarder board level
Revenue from operations ₹8,00,000 and ₹10,00,000; expenses ₹5,00,000 and ₹6,50,000. Prepare a Comparative Statement of Profit and Loss up to profit before tax. (3 marks)
Hint
PBT 3,00,000 and 3,50,000.
Answer
Revenue +2,00,000 (25%); expenses +1,50,000 (30%); PBT 3,00,000 → 3,50,000: +50,000 (16.67%).
Q5 · 3 marks · Short answerHarder board level
Find the missing figures: (i) long-term borrowings were ₹4,00,000 last year and fell by 25%; (ii) property, plant and equipment are ₹9,00,000 this year after an increase of 50%. (3 marks)
Hint
Multiply or divide by (1 ± %).
Answer
(i) This year = 4,00,000 × 0.75 = ₹3,00,000. (ii) Last year = 9,00,000 ÷ 1.5 = ₹6,00,000.
Q6 · 3 marks · Short answerHarder board level
State any three objectives of preparing comparative statements. (3 marks)
Hint
Trend, comparison, forecasting.
Answer
(1) To show the direction and trend of changes in items over time. (2) To compare the firm's performance and position with its own past and with other firms. (3) To help forecast and plan by revealing strengths and weaknesses.
Q7 · 3 marks · Short answerHarder board level
PBT was ₹2,00,000 in 2024-25 and ₹2,50,000 in 2025-26; tax rate 40%. Show tax and PAT with absolute and percentage changes. (3 marks)
Hint
PAT = 60% of PBT.
Answer
Tax: 80,000 → 1,00,000 (+20,000; 25%). PAT: 1,20,000 → 1,50,000 (+30,000; 25%).
Q8 · 1 mark · Assertion-reasonHarder board level
Assertion (A): Absolute changes alone can mislead when comparing items of very different sizes.
Reason (R): Percentage changes show the change relative to each item's base.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Size versus speed.
Answer
(a) Both A and R are true, and R is the correct explanation of A.
Q9 · 3 marks · Short answerHOTS / competency
A comparative balance sheet shows current assets falling from ₹3,00,000 to ₹2,70,000 and current liabilities rising from ₹1,00,000 to ₹1,50,000. Calculate the current ratio in both years and comment. (3 marks)
Hint
Current assets ÷ current liabilities.
Answer
Previous year 3 : 1; current year 2,70,000 ÷ 1,50,000 = 1.8 : 1. Liquidity has weakened: short-term obligations rose 50% while current assets fell 10%.
Q10 · 3 marks · Short answerHOTS / competency
Total assets grew by 12.5%, shareholders' funds by 20%, and long-term borrowings fell by 25%. What does this suggest about the company's financing, and is it a good sign? (3 marks)
Hint
Owners versus lenders.
Answer
Growth was financed by owners (retained profits or fresh capital) while long-term debt was repaid, so dependence on borrowed funds fell. It lowers financial risk and interest burden, a healthy sign, though the rise in current liabilities should be watched.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.What is the base for percentage change in comparative statements?Show answer
The previous year's figure.
2.Another name for comparative statement analysis?Show answer
Horizontal analysis.
3.₹2,00,000 → ₹1,50,000: percentage change?Show answer
(−)25%.
4.Name the two comparative statements in the syllabus.Show answer
Comparative Balance Sheet and Comparative Statement of Profit and Loss.
5.Current year if previous was ₹80,000 and change +15%?Show answer
₹92,000.

Comparative Statements: frequently asked questions

What is a comparative statement in Class 12?

A statement showing financial figures of two or more years side by side, with absolute and percentage changes, to study trends.

How is a comparative statement different from a common-size statement?

Comparative statements compare across years (horizontal); common-size statements express each item as a percentage of a total within one year (vertical).

Do I need notes in a comparative balance sheet?

Usually not; the board asks for major heads with absolute and percentage changes unless sub-heads are given.

How many decimals should percentages have?

Two decimals is standard; keep the sign for decreases.