Which of the following is a potential limitation of financial statement analysis?
A)Lack of comparability of firms in different industries
B)The impact of changing economic conditions
C)The impact of having more than one acceptable alternative accounting principle for accounting for a given transaction or economic event
D)All of the other answers are correct.

Question

Quizplus · Accepted Answer

All of the other options can be potential limitations of financial statement analysis. Lack of comparability of firms in different industries can make it difficult to make meaningful comparisons. Economic conditions can have a significant impact on a company's financial performance and make it challenging to predict future performance based on historic data. Having more than one acceptable accounting principle can lead to inconsistencies between companies and make it challenging to accurately compare financial statements.

Which of the Following Is a Potential Limitation of Financial