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Comparative financial statements refer to statements which enable comparison that is both intra and inter firm and is based over a period of time. These statements help various users of accounting information in evaluating financial progress of a firm in relative terms. These statements express the data in absolute figures or as percentage change and absolute change that occurs in the item of the financial statement over a period of time. The data presented in financial statements are self-explanatory and easy to understand. When items of the financial statement are treated with the same accounting policies and practices over a fixed period of time, then the comparative data derived from such statements bear meaningful comparisons.
Two common types are:
1. Comparative Income Statement
2. Comparative Balance Sheet