Questions: Question 6 of 10 View Policies Current Attempt in Progress The use of alternative accounting methods is not a problem in ratio analysis because the footnotes disclose the method used. may be a problem in ratio analysis even if disclosed. is only a problem in ratio analysis with respect to inventory. is not a problem in ratio analysis since eventually all methods will lead to the same end. Save for Later

The answer is B: may be a problem in ratio analysis even if disclosed.

Explanation for each option:

A. "The use of alternative accounting methods is not a problem in ratio analysis because the footnotes disclose the method used."

• This option is incorrect because even though footnotes disclose the accounting methods used, the differences in methods can still affect the comparability of financial ratios. For example, different depreciation methods (straight-line vs. accelerated) can lead to different expense and asset values, impacting ratios like Return on Assets (ROA).

B. "The use of alternative accounting methods may be a problem in ratio analysis even if disclosed."

• This option is correct. Even if the accounting methods are disclosed, they can still create inconsistencies that affect the comparability of financial ratios across different companies or periods. For instance, using different inventory valuation methods (FIFO vs. LIFO) can result in different cost of goods sold and inventory values, which in turn affect profitability and liquidity ratios.

C. "The use of alternative accounting methods is only a problem in ratio analysis with respect to inventory."

• This option is incorrect because alternative accounting methods can affect various aspects of financial statements, not just inventory. For example, different methods of revenue recognition or depreciation can also impact financial ratios.

D. "The use of alternative accounting methods is not a problem in ratio analysis since eventually all methods will lead to the same end."

• This option is incorrect because different accounting methods can lead to different financial outcomes and ratios, and they do not necessarily converge to the same end. For example, the choice between capitalizing and expensing certain costs can have long-term effects on financial statements and ratios.

In summary, the use of alternative accounting methods can indeed pose a problem in ratio analysis, even if these methods are disclosed, because they can affect the comparability and consistency of financial ratios.