Financial Reporting And Analysis - Financial Reporting And Analysis Section 1
51. Which of the following statements is most accurate about balance sheets?
- Option : B
- Explanation : A is incorrect because under US GAAP, intangible assets are reported using the cost model. C is incorrect because in a liquidity-based presentation, assets are ordered in decreasing order of liquidity. Less liquid items appear near the bottom of the listing.
52. The balance sheet is based upon which of the following equations?
53. Which of the following is least likely correct about balance sheets?
- Option : B
- Explanation : Equity is a not a measure of the company’s intrinsic value because different items are measured differently, such as historical cost, fair value.
- Option : A
- Explanation : A balance sheet where assets and liabilities are classified as current and non-current is called a classified balance sheet.
- Option : C
- Explanation : With a liquidity-based format assets and liabilities are presented from most liquid to least liquid. Such a presentation is appropriate for banks.
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