There are two difficulties that arise in understanding and interpreting the income statements.One is the disagreements about what exactly should be reported as revenues and the other is
A)whether to report the revenues.
B)what should be considered as expenses.
C)disputes over when to recognize revenues.
D)the preferable tax rate to incorporate.

Question

Quizplus · Accepted Answer

Disputes over when to recognize revenues can arise because there are different accounting methods for recognizing revenue, such as the cash basis and accrual basis methods. This can affect the timing of when revenue is reported on an income statement and can create difficulties in comparing financial statements between different companies. The other options (A, B, and D) do not accurately describe the difficulties in interpreting income statements.

There Are Two Difficulties That Arise in Understanding and Interpreting