Which of the following is the most serious limitation to financial statement analysis of publicly traded companies?
A)Some companies don't use GAAP.
B)Inflation can distort comparisons between years.
C)Some companies report nonoperating items such as extraordinary gains and losses,while others do not.
D)Different industries use different account names.

Question

Quizplus · Accepted Answer

Inflation can significantly impact the comparability of financial statements over time and make it difficult to understand the true financial performance of a company. This limitation is considered to be the most serious as it affects all industries and companies, regardless of their accounting policies or management practices. Other limitations such as non-operating items or industry-specific accounting differences can be overcome with adjustments and adjustments, but inflation is a pervasive challenge.

Which of the Following Is the Most Serious Limitation to Financial