All of the following are reasons that one should be cautious in interpreting financial statements EXCEPT
A) firms can take steps to over- or understate earnings at various times.
B) it is difficult to compare two firms that use different depreciation methods.
C) financial managers have quite a bit of latitude in using accounting rules to manage their reported earnings.
D) All of these choices are correct.

Question

Quizplus · Accepted Answer

Each of the statements A, B, and C correctly identifies a reason for caution in interpreting financial statements, making D ("All of these choices are correct.") the exception as it does not provide a reason for caution but rather affirms the validity of the other reasons.

All of the Following Are Reasons That One Should Be