Significant variations in accounting methods among firms make meaningful ratio comparisons between firms more difficult than if all firms used the same or similar accounting methods.

Question

Quizplus · Accepted Answer

Significant variations in accounting methods can cause distortions in financial ratios and make it more challenging to compare and analyze financial statements of different companies. If all firms used the same or similar accounting methods, it would be easier to compare their financial performance and make meaningful ratio comparisons.

Significant Variations in Accounting Methods Among Firms Make Meaningful Ratio