Which is an important characteristic of financial reporting that ensures users can make comparisons across entities?

The characteristic of financial reporting that is crucial for allowing users to make comparisons across different entities is comparability. This principle ensures that financial statements are prepared in a standard manner, which enables users—such as investors, analysts, and regulators—to evaluate the financial performance and position of multiple companies effectively.

When financial reports adhere to consistent accounting standards and practices, it allows stakeholders to assess their results against those of other companies within the same industry or sector. Comparability helps in identifying trends, making informed investment decisions, and evaluating management performance across peer firms.

While consistency refers to the use of the same accounting methods over time within a single entity, relevance pertains to the importance of the information provided to decision-making. Transparency relates to the clarity of financial reporting and the ease with which stakeholders can understand it. Although these concepts are all essential in financial reporting, comparability is specifically focused on the ability to compare financial statements between different entities, making it the correct choice in this context.