Comparability problems arise because
A)firms may use different generally accepted accounting principles.
B)inflation may affect firms differently due to accounting conventions used.
C)financial analysts do not know how to compare financial statements.
D)firms may use different generally accepted accounting principles, and inflation may affect firms differently due to accounting conventions used.

Question

Quizplus · Accepted Answer

Both options A and B are possible reasons for comparability problems. Firms may use different accounting principles to prepare financial statements, which may make it difficult for analysts to compare them. Additionally, inflation may affect firms differently depending on the accounting conventions they use, which can further complicate comparisons between companies. Therefore, the best answer is D, which includes both of these factors.

Comparability Problems Arise Because