Final answer:
The correct answer is A. Statements should be for companies in similar types of businesses.
Step-by-step explanation:
The correct answer is A. Statements should be for companies in similar types of businesses.
Comparative financial statements are used to analyze the financial performance of a company over multiple periods. They are prepared by presenting financial information for multiple periods side by side for easy comparison. There are several criteria that need to be met for comparative financial statements to be useful and meaningful.
These include:
- Statements should demonstrate similar operating periods to allow for meaningful comparisons between periods.
- Statements should be prepared using the same accounting principles to ensure consistency in the presentation of financial information.
- Statements should show corresponding data for the same periods in the prior year to analyze year-over-year changes.
- However, companies in similar types of businesses is not a criteria for comparative financial statements according to the provided information.