Question

3. Financial statements of one accounting period must be comparable to another in order for the...

3. Financial statements of one accounting period must be comparable to another in order for the users to derive meaningful conclusions about the trends in an entity's financial performance and position over time.

The statement above refers to which concept?

A. Neutrality concept.

B. Comparability concept.

C. Entity concept.

D. Monetary concept.

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Homework Answers

Answer #1

Answer:

Option B: Comparability Concept

Explanation:

Comparability Concept means that the financial statements should be comparable to each other so that the stakeholders can draw conclusions about entity's performance.

Neutrality concept means that the financial statement should be free from financial errors and commissions.

Entity concept means that the business is treated differently from its owners.

Monetary concept means that only the monetary transactions (transactions involving monies) should be recorded in financial accounting.

Hence, option 'B' is correct, and rest all are incorrect.

In case of any doubt or clarification, feel free to come back via comments.

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