The financial position of companies whose business is seasonal can be dramatically different depending upon the time of year chosen to construct financial statements.This time sensitivity is especially true with respect to the firm's statement of financial position.

Question

Quizplus · Accepted Answer

The financial position of seasonal businesses may vary significantly depending on the time of year for which financial statements are prepared. This is because seasonal businesses usually experience changes in revenue, cash flows, and assets/liabilities throughout the year. Hence, the statement of financial position may not accurately reflect the true financial position of the company if it is prepared during a low season or high season.

The Financial Position of Companies Whose Business Is Seasonal Can