The use of alternative accounting principles
A) is not a problem in ratio analysis because the notes to the statements disclose the principles used.
B) may be a problem in ratio analysis even if disclosed.
C) is not a problem in ratio analysis since eventually all principles will lead to the same end.
D) is only a problem in ratio analysis with respect to inventory.

Question

Quizplus · Accepted Answer

The use of alternative accounting principles can be a problem in ratio analysis even if these principles are disclosed in the notes to the financial statements. Different accounting methods can significantly affect financial ratios and comparisons, making it challenging to accurately compare financial performance across companies that use different accounting principles.

The Use of Alternative Accounting Principles