Which of the Following Statements Is False Concerning the Use

question 295

Multiple Choice

Which of the following statements is false concerning the use of accounting data versus market value data?

• A) The primary reason for using accounting data is the lack of readily available market value information.
• B) Whenever market value information is available, it should be used instead of accounting data.
• C) If market value and accounting data conflict, the accounting data should be given precedence.
• D) If a firm has only current assets and current liabilities, book values will likely be reasonable approximations of market values.
• E) Little direct market value information exists for privately held and not-for-profit businesses.

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Definitions:

Simple Interest

A method of calculating interest where it is applied only to the principal amount, not on the accumulated interest.

Profit

The financial gain obtained when revenue from business activities exceeds the expenses, costs, and taxes involved in operating.

Simple Interest

An interest calculation method where the charge is based on the original principal amount, unaffected by the added interest.

Required Rate

The minimum return an investor expects to achieve by investing in a particular asset, taking into account its risk level.