Comparing the performance of an entity with the industry norms is complicated by:
A) not all businesses in the industry being the same.
B) different businesses using different accounting methods.
C) business being diversified.
D) all of the above.

Question

Quizplus · Accepted Answer

A) not all businesses in the industry being the same makes it difficult to compare their performance as they may have different products, size, location, or target market.

B) different businesses using different accounting methods can make it difficult to compare financial statements as there may be variations in the way data is presented.

C) business being diversified can also affect their performance and make it harder to compare to their peers as their portfolio may span across multiple industries.

Therefore, all of the above factors make it complicated to compare the performance of an entity with industry norms.

Comparing the Performance of an Entity with the Industry Norms