Which of the Following Is Not a Limitation of Financial

question 25

Multiple Choice

Which of the following is not a limitation of financial statements?

• A)Financial statements report quantitative economic information; they do not reflect qualitative economic variables.
• B)The cost principle requires assets to be recorded at their original cost; thus, the balance sheet does not generally reflect the fair values of most assets and liabilities.
• C)Net income from the income statement is added to the Retained Earnings account balance in the balance sheet.
• D)Estimates are used in many areas of accounting; when the estimate is made, about the only fact known is that the estimate is probably not equal to the "true" amount.

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Definitions:

Qualitative Procedure

Methods used to gather and analyze non-numerical data to understand concepts, thoughts, or experiences.

Herman Kahn

An American futurist and military strategist known for his works on nuclear strategy and scenarios of potential future conflicts.

Strategic Management

A management approach focused on setting goals, analyzing competitive environments, defining strategies, and allocating resources to achieve long-term objectives.

Strategic Planning

The process of defining an organization's strategy or direction and making decisions on allocating resources to pursue this strategy.