Which assessment tool allows for comparisons between different firms and years?

The monetary assumption is indeed the most relevant tool for making comparisons between different firms and across different years. This accounting principle states that all transactions should be recorded in monetary terms, allowing for a consistent measure of value. This consistency is crucial when analyzing financial statements over time or across various organizations, as it ensures that all data reflects a uniform understanding of value.

When firms prepare their financial statements based on the monetary assumption, it makes it possible to conduct financial analyses, such as ratio analysis or trend analysis, that are essential for comparing operating performance, profitability, or financial health.

In contrast, depreciation schedules provide insights into asset value over time but do not facilitate comparisons across different firms as effectively since they can vary based on accounting policies and methods used. Inventory valuation affects how assets are recorded but again does not directly lend itself to inter-firm or inter-year comparisons without considering the context of the monetary assumption. Cash flow statements provide a view of cash inflows and outflows but are not designed solely for comparative analysis in the same way that the monetary assumption allows.

Thus, the monetary assumption establishes a basis for comparison that is crucial for assessing financial performance consistently across different entities and time periods.