A comparative income statement presents the results of multiple accounting periods in separate columns. The intent of this format is to allow the reader to compare the results of multiple historical periods, thereby giving a view of how a business is performing over time. Spikes and dips in revenues and expenses are immediately obvious when this format is used, and can then be investigated by management.
The most common presentation format for a comparative income statement is to show the results of the most recent accounting period in the column immediately adjacent to the row titles, while the results of earlier periods are shown progressively further to the right. An example of this format for a multi-month presentation is March | February | January.
An alternative presentation format is the reverse, where the results of the most recent period are listed furthest to the right. However, this is a less usable format, since if many columns are used, the reader cannot easily associate the line descriptions on the far left side of the presentation with the most recent financial results listed on the far right side. An example of this format for a multi-month presentation is January | February | March.
The results of this comparison may not be useful if an account has been shifted into a different line item at some point during the reporting period. Such a change would cause a downward spike in one line item and an upward spike in another line item. Consequently, such changes in reporting should be as infrequent as possible, or all clustered at the beginning of a fiscal year.