Which of the following is a limitation of the balance sheet?
A)Many items that are of financial value are omitted.
B)Judgements and estimates are used.
C)Current fair value is not reported.
D)All of these

Question

Quizplus · Accepted Answer

All of the options listed are limitations of the balance sheet. The balance sheet only includes items that can be quantified, which means that intangible assets like brand value or employee morale are not reflected. Additionally, the balance sheet relies on estimates and judgments to determine the value of certain assets and liabilities, which can lead to discrepancies. Lastly, the balance sheet reports assets and liabilities at historical cost, rather than fair market value, which may not accurately reflect the current value of the company's assets and liabilities.

Which of the Following Is a Limitation of the Balance