Comparative income statements allow users to compare inventory levels with assets listed on the income statement.

Question

Quizplus · Accepted Answer

Comparative income statements allow users to compare financial data for different periods, usually two or more years. They show changes in revenue, expenses, and net income over time. Inventory levels and assets listed on the income statement are not directly comparable as inventory is usually classified as a current asset and valued at cost, while other assets may be classified as long-term and valued at their historical cost or fair market value.

Comparative Income Statements Allow Users to Compare Inventory Levels with Assets