Significant variations in accounting methods among firms make meaningful ratio comparisons between firms more difficult than if all firms used similar accounting methods. True False

True

Explanation:

Accounting methods are the rules that a company uses to record and report it's expenses and revenues.

For the sake of comparison there is need for uniformity of accounting methods between any two entities that are being compared.

The two accounting methods are:

- Cash basis where revenue and expenses are recognised only when cash is collected.

- Accrual basis is when revenues and expenses are recognised when they are earned. For example is goods are sold on credit it is recognised as revenue even when cash has not been collected.

In comparing ratios of two firms with different accounting methods, variation in their revenues and expenses at that point in time will be different. So comparisons will not be meaningful

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