Which of the Following Is the Most Serious Limitation to Financial

question 42

Multiple Choice

Which of the following is the most serious limitation to financial statement analysis of publicly traded companies?

• A)Some companies do not use GAAP.
• B)Inflation can distort comparisons between years.
• C)Some companies report nonoperating items such as extraordinary gains and losses,while others do not.
• D)Different industries use different account names.

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Definitions:

Fixed Mind-Sets

Fixed mind-sets refer to the belief that one's abilities, intelligence, and talents are static traits that cannot significantly change.

Stable Attributions

The tendency to explain an individual's behavior as being due to consistent and enduring internal characteristics.

Negative Affect

A subjective feeling of distress and unpleasurable engagement that can include mood states such as anger, guilt, and nervousness.

Challenging Tasks

Tasks or activities that require significant effort or skill to complete, often seen as opportunities for growth.