Accounting 9706 · AS & A Level · Analysis and communication of accounting information

Analysis and communication of accounting information — practice question

Which statement correctly describes the limitations of comparing accounting ratios between similar businesses and across different time periods?

  • AThe ratios are best used when the businesses trade in different markets.
  • BThe ratios are only useful when the businesses have different accounting policies.
  • CThe ratios never explain the cause of difference between the results of the two businesses.
  • DThe ratios always take into account seasonal factors.

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