Currently,financial Reporting Does Not Take into Account Changes in Prices,either

question 52

Essay

Currently,financial reporting does not take into account changes in prices,either at the general level or at the specific level.Many analysts believe that not taking price changes into account distorts the meaningfulness of financial reports.How do changing prices affect financial reports?

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Definitions:

Continuing Operations

The segments or units of a business that are expected to continue operations into the foreseeable future, as opposed to those segments that are being discontinued or sold.

Comparative Financial Statements

Financial statements that provide a comparison of a company's financial performance and position over multiple periods.

Percentage Analysis

A financial analysis technique that expresses each item in a financial statement as a percentage of a base amount to identify trends and make comparisons.

Vertical Analysis

A method of financial statement analysis in which each entry for the various categories is represented as a percentage of a base figure.