Question

Why does the SEC require that balance sheets provide two years of comparative financial information and income statements provide three years of information?

a. Regulatory requirement
b. Historical analysis
c. Trend analysis
d. Operational necessity

Answer 1

Balance sheets provide two years of comparative financial information and income statements provide three years of information for historical analysis.

Step-by-step explanation:

The reason why the SEC requires balance sheets to provide two years of comparative financial information and income statements to provide three years of information is __b. Historical analysis__. This requirement allows for the analysis of financial performance over time and helps to identify trends and changes in a company's financial position. By comparing financial information from different periods, investors and analysts can assess the company's stability, growth, and profitability.