Comparability of financial information results when:Group of answer choicesdifferent entities use different accounting principles.different entities use the same accounting principles.that information can be depended upon to be relevant.the financial reports are understandable. PreviousNext

Comparability of financial information results when different entities use the same accounting principles.

Here's why:

1. Comparability in financial information means that users can identify similarities and differences between two or more items.

2. If different entities use different accounting principles, it would be difficult to compare their financial information because they are not prepared on the same basis.

3. On the other hand, if different entities use the same accounting principles, their financial information would be prepared on the same basis, making it easier to compare.

4. While relevance and understandability are important qualities of financial information, they do not directly contribute to comparability. Relevance refers to the capacity of the financial information to influence economic decisions, and understandability means that the information presented is clear and easy to understand.

So, the correct answer is: different entities use the same accounting principles.