Question

Companies typically present their financial statements _______.

A) To show the most recent year only
B) In comparative form, which means showing two consecutive years of balance sheets and three consecutive years of the income statement, statement of cash flows, and statement of stockholders' equity
C) In standard form, which means showing three consecutive years of balance sheets and three consecutive years of the income statement, statement of cash flows, and statement of stockholders' equity
D) Only to those entities who have expressed an interest in scrutinizing them.

Answer 1

Companies typically present their financial statements in comparative form, with two years of balance sheets and three years of income statements, cash flows, and stockholders' equity statements.

Step-by-step explanation:

Companies typically present their financial statements in comparative form, which means showing two consecutive years of balance sheets and three consecutive years of the income statement, statement of cash flows, and statement of stockholders' equity.

This approach enables stakeholders to assess the company's performance over time, recognizing trends and comparing year-over-year changes. The use of a T-account format for the balance sheet allows for a clear visual representation of the company's assets and liabilities, enhancing the understanding of the company's financial position.