Comparability Problems Arise Because

question 85

Multiple Choice

Comparability problems arise because

• A) firms may use different generally accepted accounting principles.
• B) inflation may affect firms differently due to accounting conventions used.
• C) financial analysts do not know how to compare financial statements.
• D) firms may use different generally accepted accounting principles, and inflation may affect firms differently due to accounting conventions used.
• E) firms may use different generally accepted accounting principles, and financial analysts do not know how to compare financial statements.

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Definitions:

Total Assets

The sum of everything an organization owns, both current and noncurrent, that can be used to generate value.

Income Statement

A report detailing a business's income, outgoings, and profit over a set period.

Financial Statement

A financial statement is a report that provides information regarding a company's financial performance and position, including its income statement, balance sheet, and cash flow statement.

Profit

The financial gain achieved when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.