Which of the following statements is true regarding valuation amounts on the balance sheet?
A) Stockholders' equity reflects the amount the stockholders would receive upon liquidation.
B) Assets are recorded at current cost.
C) Stockholders' equity reflects the current market value of the stock
D) There are a variety of assumptions used in determining amounts reported on the balance sheet.

Question

Quizplus · Accepted Answer

Valuation amounts on the balance sheet are determined using various assumptions and methods, such as historical cost, fair value, or net realizable value, depending on the type of asset or liability. Therefore, option D is correct as it acknowledges the existence of these different valuation methods. Option A is incorrect because stockholders' equity reflects the residual interest in the company after all liabilities have been paid, not the amount that stockholders would receive upon liquidation. Option B is partially correct; assets may be recorded at historical cost or fair value, depending on the accounting standard used. Option C is incorrect because stockholders' equity reflects the amount invested by the owners, not the current market value of the stock.

Which of the Following Statements Is True Regarding Valuation Amounts