Income can be distorted by factors other than inflation. The most important causes of distortion for inter-industry comparisons are
A) timing of revenue receipts and nonrecurring gains or losses.
B) tax write-off policy and use of different inventory methods.
C) Both of these.
D) None of the options

Question

Quizplus · Accepted Answer

Both the timing of revenue receipts and nonrecurring gains or losses, as well as tax write-off policy and use of different inventory methods, can distort income and make inter-industry comparisons difficult. For example, one industry may receive a large amount of revenue in one quarter, while another industry may have nonrecurring gains or losses that skew their income for a certain period of time. Similarly, different tax policies and inventory methods can significantly impact reported income. Therefore, it is important to consider these factors when comparing income across different industries.

Income Can Be Distorted by Factors Other Than Inflation