Two Companies Made Similar Acquisitions of Fixed Assets During the Past

question 1

Multiple Choice

Two companies made similar acquisitions of fixed assets during the past year, yet one company consistently reports a lower amortization expense.This is an example of which of the following limitations of financial ratios?

• A)Financial statements are historical.
• B)Managers prepare financial statements.
• C)Accounting policies and estimates affect ratios.
• D)Financial statements are not the only source of information.

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