Which of the following is a potential limitation of financial statement analysis?
A)Lack of comparability of firms in different industries
B)The impact of changing economic conditions
C)The impact of having more than one acceptable alternative accounting principle for accounting for a given transaction or economic event
D)All of these answer choices are correct.

Question

Quizplus · Accepted Answer

All of the mentioned answer choices are potential limitations of financial statement analysis. Lack of comparability of firms in different industries makes it difficult to make meaningful comparisons, while changing economic conditions can impact a company's financial performance. Additionally, having more than one acceptable alternative accounting principle can lead to different financial statements for the same transaction or economic event, making comparisons inaccurate or misleading.

Which of the Following Is a Potential Limitation of Financial