A Concept of Comparability in Financial Reporting.

Abstract The subject of comparability in financial reporting has received much attention in recent years. This is evidenced by various articles in the accounting and financial literature dealing with comparability or related subjects such as uniformity. Yet the essential issues of comparability have not been defined. In fact, there is not even a commonly understood meaning of the term. In the absence of a professional or technical definition or concept of comparability, one must rely on a standard denotation. According to the dictionary, the word comparable means "capable of being compared." Also, similar objects can be compared even though differing amounts of information are available on each object. The financial statements of two companies can be compared even though one set of statements is fully explained, with detailed information and explanatory notes, while the other set is highly summarized, with little detailed information and no explanatory notes. It does not seem likely that the various references in the literature to comparability of financial statements intend to imply a broad meaning of the term.