Making Notes in the Financial Statements to Explain the Justification

question 113

Multiple Choice

Making notes in the financial statements to explain the justification of valuation changes and other financial decisions would be an example of:

• A)conservatism.
• B)consistency.
• C)materiality.
• D)full disclosure.

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Definitions:

Current Liabilities

Short-term financial obligations that are due within one year or within a normal operating cycle.

Debt-to-equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets, key in assessing financial leverage.

Assets

Resources owned by a business or individual that are expected to provide future economic benefits.

Equity

The value of an ownership interest in property or a business, after deducting liabilities from assets.