Preparation of Comparative Income Statement

A Comparative Income Statement has the following six columns:

1. First Column: In the first column, every item of the Statement of Profit & Loss (Revenue and Expenses) is written. Revenue from Operations and Other Income are written separately. Expenses such as Cost of Materials Consumed, Purchase of Stock-in-Trade, Changes in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade, Employees Benefit Expenses, Depreciation and Amortisation Expenses, Finance Cost, and Other Expenses are written.

2. Second Column: In the second column, Note No. given against the item in the Income Statement is written. 

3. Third Column: In the third column, the amounts of the previous year are written.

4. Fourth Column: In the fourth column, the amounts of the current year are written. 

5. Fifth Column: In this column, the difference (increase or decrease) in the amounts between the current and previous accounting year is recorded. 

6. Sixth Column: In the last column, the difference determined in the previous column is expressed in percentage form by taking the previous year’s amount as a base. It can be determined with the help of the following formula:

[Tex]Percentage~Change=\frac{Absolute~Change}{Amount~of~Previous~Year}\times{100}[/Tex]

A comparative income statement is a financial report that presents the results of multiple accounting periods side-by-side. For the estimation of an organisation’s future progress, it is essential to look into its past performance, for which performing a comparative study of two or more years of company financial statements becomes necessary. A statement that helps in the comparative study of the components of a company’s balance sheet and income statement over a period of two or more years, both in absolute and percentage form, is known as a Comparative Statement. It is a horizontal type of analysis and not only provides the absolute figures of various years but also, the columns to indicate any increase or decrease in these figures from one year to another in absolute and in percentage form. One can form an opinion on the progress of an enterprise based on the comparative statements.