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Comparability By: Graeme & Moose.

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Presentation on theme: "Comparability By: Graeme & Moose."— Presentation transcript:

1 Comparability By: Graeme & Moose

2 Comparability Two different companies comparing one another’s financial information, also using the same accounting principles.

3 Examples Company 1 comparing financial information with company 2, who use the same accounting principles, to understand if their (company 1) performance had decreased or increased.

4 Consistency Comparability is easier when accounting policies are used consistently Consistency means that a company uses the same accounting principles and methods from year-to-year. Meaning they don’t change their accounting policies from, for example, FIFO in year 1 to LIFO in year 2.

5 Quiz Question What is comparability?

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