CS Executive · Corporate Accounting and Financial Management · Financial Statement Analysis
Kaveri Foods Ltd's trade receivables were ₹2,00,000 in the previous year and ₹1,50,000 in the current year. How would a comparative balance sheet show this item's change?
Receivables show a decrease of ₹50,000, which is 25%. The fall from ₹2,00,000 to ₹1,50,000 is measured against the previous year's base of ₹2,00,000. Dividing by the current year's figure would incorrectly give 33.33%.
- AIncrease of ₹50,000, or 33.33%
- BDecrease of ₹50,000, or 25%Correct
- CDecrease of ₹50,000, or 33.33%
- DIncrease of ₹50,000, or 25%
Explanation
Current year is lower than previous year, so it is a decrease of ₹50,000. Percentage = 50,000 / 2,00,000 x 100 = 25%. Using the current year as base would give 33.33%, which is wrong.
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