The least problems encountered when comparing the financial statements of one firm with those of another firm occur when the firms:
A)are in different lines of business.
B)have geographically diverse operations.
C)use different methods of depreciation.
D)are both classified as conglomerates.
E)have the same fiscal year-end.

Question

Quizplus · Accepted Answer

Comparing financial statements of firms with the same fiscal year-end allows for easier comparison since their financial data covers the same time period. This eliminates potential differences in accounting treatments and makes it easier to identify trends and analyze financial ratios. Differences in lines of business, geography, and methods of depreciation can create significant variations in financial statements that can make comparisons difficult. Classification as a conglomerate may not necessarily reduce problems when comparing financial statements if the firms operate in different lines of business.

The Least Problems Encountered When Comparing the Financial Statements of One