Which of the Following Is a Limitation of Ratio Analysis

question 68

Multiple Choice

Which of the following is a limitation of ratio analysis?

• A) Ratios depend on accounting data based on historical costs.
• B) Differences in accounting practices like FIFO versus LIFO make comparison difficult.
• C) Trend analysis could be distorted by financial statements affected by inflation.
• D) All of the above are limitations of ratio analysis.

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Definitions:

Reinforcement

In psychology, the process of encouraging or strengthening a behavior through rewards or consequences.

Model and Subject

In research or educational contexts, the model is the system or example being studied or imitated, while the subject is the individual or entity being observed or experimented on.

Hostile Behaviors

Actions or attitudes that express anger, aggression, or resentment towards others.

Imitated

Copied or reproduced someone's behavior, action, or expression, often to learn or fit in.