Question

A useful way of standardizing financial statements is to choose a _______ year and then express each item relative to that amount.

Answer 1

A useful way of standardizing financial statements is to choose a base year and then express each item relative to that amount.

This is further explained below.

What is a financial statement?

Generally, Financial statements are written documents that represent a company's commercial operations as well as its financial performance within a certain period of time.

Audits of financial accounts are often conducted by government agencies, accounting firms, and other organizations for the objectives of ensuring their correctness and meeting the requirements for taxation, financing, and investing.

In conclusion, Selecting a base year and then expressing each item in terms of its relationship to that amount is a practical strategy for standardizing financial statements.

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