M. F. Hoffman is the chief executive officer of Hi-Tech Electronics. Hoffman is an expert engineer but a novice in accounting. Hoffman asks you, as an accounting major, to explain

(a) the bases for comparison in analyzing Hi-Tech's financial statements and

(b) the limitations, if any, in financial statement analysis. Instructions Write a memo to M. F. Hoffman that explains the basis for comparison and the factors affecting quality of earnings.

AppendixLO1