Two Companies Made Similar Acquisitions of Fixed Assets During the Past

Multiple Choice

Two companies made similar acquisitions of fixed assets during the past year, yet one company consistently reports a lower amortization expense.This is an example of which of the following limitations of financial ratios?

A) Financial statements are historical.
B) Managers prepare financial statements.
C) Accounting policies and estimates affect ratios.
D) Financial statements are not the only source of information.