It is easier to evaluate a firm using financial statements when the firm:
A)is a conglomerate.
B)has recently merged with its largest competitor.
C)uses the same accounting procedures as other firms in the industry.
D)has a different fiscal year than other firms in the industry.
E)tends to have many one-time events such as asset sales and property acquisitions.

Question

Quizplus · Accepted Answer

When a firm uses the same accounting procedures as other firms in the industry, it allows for a more accurate and meaningful comparison of financial statements. It ensures that the financial statements are consistent and comparable to those of other firms. This is important when evaluating a firm as it allows for a more informed decision-making process.

It Is Easier to Evaluate a Firm Using Financial Statements