Inadequate Disclosure Occurs When

question 35

Multiple Choice

Inadequate disclosure occurs when:

• A)a company attempts to overstate assets to make their financial position look better.
• B)management makes statements that are wrong in its annual report or any other media.
• C)assets are not written down to their appropriate values because insufficient depreciation is recorded.
• D)a company understates its liabilities and overstates its revenues and net income.

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Definitions:

Trade-in Allowance

The amount credited to the buyer by the seller for a traded-in asset toward the purchase of a new asset.

Cost Basis

The original value or purchase price of an asset or investment, used to calculate capital gains or losses for tax purposes.

Accumulated Depreciation

The total depreciation costs applied to a fixed asset from the time of its acquisition.

Fair Market Value

The price at which a willing buyer and a willing seller, both possessing reasonable knowledge of relevant facts, would exchange an asset.