Comparability problems arise because
A) firms may use different generally accepted accounting principles.
B) inflation may affect firms differently due to accounting conventions used.
C) financial analysts do not know how to compare financial statements.
D) a and b.
E) a and c.

Question

Quizplus · Accepted Answer

Comparability problems can arise due to the fact that different firms may use different accounting principles, which leads to differences in financial statements. Another issue is inflation, as it can affect firms differently based on the accounting conventions they use. Therefore, both option A and B are correct. Option C is incorrect since financial analysts are typically trained to compare financial statements using industry-standard metrics and accounting principles.

Comparability Problems Arise Because