Which of the following is not a limitation of the income statement?
A)Comparability between companies may suffer because companies don't have enough leeway to choose between accounting methods.
B)The use of different formats by companies within the same industry may hide differences in operating results.
C)The use of functional classifications, instead of activity classifications, for operating expenses may not provide sufficient information for predicting future cash outflows.
D)The matching of allocated historical costs against current revenues may not provide an accurate measure of a return on capital.

Question

Quizplus · Accepted Answer

The limitation mentioned in choice A is incorrect because the actual limitation is that comparability between companies may suffer due to the fact that companies have significant leeway to choose among different accounting methods, not because they don't have enough leeway.

Which of the Following Is Not a Limitation of the Income