Answer: Statement 1 only

## Explanation **Statement 1 is CORRECT** Cross-border company comparisons indeed face multiple challenges: - **Accounting method differences**: Different countries use different accounting standards (US GAAP vs. IFRS) - **Cultural differences**: Business practices, disclosure norms, and corporate governance vary - **Economic differences**: Currency fluctuations, inflation rates, and economic cycles differ **Statement 2 is INCORRECT** While harmonization efforts (like IFRS adoption) have reduced accounting differences, they have not eliminated the need for adjustments because: - Not all countries have adopted IFRS - Even with IFRS, implementation and interpretation differences exist - Cultural and economic differences still require adjustments - Different tax regimes and regulatory environments persist **Conclusion**: Only Statement 1 is correct, making option A the right answer.

Author: LeetQuiz Editorial Team