Limitations of the Income Statement Include All of the Following

question 44

Multiple Choice

Limitations of the income statement include all of the following except

• A)items that cannot be measured reliably are not reported.
• B)only actual amounts are reported in determining net income.
• C)income measurement involves judgment.
• D)income numbers are affected by the accounting methods employed.

---

Definitions:

Bonds

Fixed-income securities that represent a loan made by an investor to a borrower, typically corporate or governmental.

Par

The face value of a bond or stock, at which it is issued or can be redeemed before maturity.

Par Value

The nominal or face value of a stock or bond as stated by the issuing company.

Cash Interest Payment

The actual cash paid by a borrower to a lender or bondholder as compensation for the use of borrowed money, usually at set intervals.