Question

You are comparing three companies that use different depreciation methods. Which of the following would help you the most in making a comparison of the companies?

a. Disclosure of accounting policies.
b. Prospective cash receipts.
c. Claims to resources.
d. The average earnings per share for the quarter.

Answer 1

The most helpful information for comparing companies that use different depreciation methods is the disclosure of accounting policies.

Step-by-step explanation:

The most helpful information for making a comparison of the companies would be the disclosure of accounting policies.

This information would provide details about how each company is depreciating their assets and the specific depreciation methods they are using. By comparing the accounting policies, you can determine which company's depreciation method is more advantageous or effective.

Prospective cash receipts, claims to resources, and average earnings per share for the quarter may provide useful information about the financial performance of the companies, but they do not directly address the question of depreciation methods and their impact on comparison.