CFA Institute Exam CFA-Level-I Topic 2 Question 2 Discussion

Actual exam question for CFA Institute's CFA-Level-I exam

Question #: 2
Topic #: 2

[All CFA-Level-I Questions]

Which of the following would not be a limitation of the balance sheet?

ALong-lived assets may not reflect their market value because they are stated at historical cost.

BSignificant assets and liabilities may be omitted because GAAP does not require their inclusion.

CGAAP permits companies to delay recognition of value changes, such as employee benefit plans.

DSome assets and liabilities are carried at historical cost bearing little relationship to their real market value.

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Suggested Answer: C

by Francene at Aug 27, 2024, 09:58 PM

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4 days ago

The balance sheet doesn't show future cash flows, which is a key limitation.

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4 days ago

I agree with both of you. Another limitation could be that it doesn't reflect the market value of assets.

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6 days ago

That's true, but another limitation could be that it doesn't include intangible assets.

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8 days ago

I think one limitation could be that it only shows a snapshot in time.

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