Same treatment for the transactions with same nature to ensure the reports comparable

When you roughly compare the company’s financial reports between the current period and a previous period, you may feel the business in current year seems not so good, the profit in the comparable period is much higher than the current period. But after analysis each item relevants to profit and cash flow, you may not be so disappointed, because you find that some items in the reports are not comparable.

How to avoid above situation? The company's accounting treatment needs to obey same method using for the transactions with same nature. Commonly this situation is easy to happen when the company's accountant change or the outsourcing bookkeeping company change, difference accountants may choose a difference method to treat the same nature transactions.

To stipulate the fixed treatments about main items in balance sheet and income statement official is a good way to avoid the situation happening when the company's accountant change. Also, to fixed each item in the balance sheet and income statement, if more accounts need to be used, the user needs to apply for adding the new account.

#What Can We Do to Ensure the Financial Reports Comparable