When comparing the financial statements of one firm with those of another firm, a problem that may be encountered is that the firms may use differing accounting methods for inventory purposes.

Question

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Different firms may use various accounting methods for inventory, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out), which can lead to differences in financial statements and make direct comparisons challenging.

When Comparing the Financial Statements of One Firm with Those