Business Tools Downloadable checklists, model business plans, forms and other documents. Our small business online advice columnist. CCH Online Store Books on small business topics. Free E-mail Newsletter Monthly updates on developments affecting small businesses. The second major cause of distortions in the picture presented by financial statements and ratio analysis of the items in the statements is the different accounting procedures that may be used in arriving at the figures presented in the income statement and balance sheet .
Consistency generally is required within a particular business.
However, different policies in different businesses can affect their reported results and distort the picture of where your business stands in relation to other businesses. The time at which sales show up on an income statement may differ from business to business. A more aggressive approach may accelerate income items by reporting them at the earliest possible moment, while a more conservative approach may postpone revenues. Depreciation charges for financial reporting purposes on essentially similar assets can differ from business to business, depending on accounting policies with regard to depreciation methods and useful lives. Inventory accounting policies may differ.