Which of the following is a difference between internal comparison and external comparison with regard to financial statement analysis?
A) An internal comparison reveals unexpected relationships within a company, whereas an external comparison reveals the absence of expected relationships outside a company.
B) An internal comparison involves comparing a company with the industry as a whole, whereas an external comparison involves comparing a company's current performance with its past experience.
C) An internal comparison is done by an accountant or auditor, whereas an external comparison is done by a forensic accountant.
D) An internal comparison allows the examination of changes within a company over time, whereas an external comparison reveals the company's relative performance and financial standing.

Question

Quizplus · Accepted Answer

An internal comparison allows an analyst to examine changes within a company over time, such as changes in revenues or expenses from one year to the next. An external comparison, on the other hand, reveals a company's relative performance and financial standing in comparison to its competitors, industry norms, or the broader economy.

Which of the Following Is a Difference Between Internal Comparison