Which of the following represent problems encountered when comparing the financial statements of two separate entities?
I.Either one,or both,of the firms may be conglomerates and thus have unrelated lines of business.
II.The operations of the two firms may vary geographically.
III.The firms may use differing accounting methods.
IV.The two firms may be seasonal in nature and have different fiscal year ends.
A)I and II only
B)II and III only
C)I, III, and IV only
D)I, II, and III only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

All the options listed represent challenges in comparing financial statements of two different entities. Conglomerates have diverse business operations making comparisons difficult (I), geographic variations can affect operations and financial results (II), differing accounting methods can lead to discrepancies in financial reporting (III), and seasonal variations along with different fiscal year ends can distort direct comparisons (IV).

Which of the Following Represent Problems Encountered When Comparing the Financial