The Difference Between a Market Value Balance Sheet and a Book

question 76

Multiple Choice

The difference between a market value balance sheet and a book value balance sheet is that a market value balance sheet:

• A)places assets on the right hand side.
• B)places liabilities on the left hand side.
• C)does not equate the right hand with the left hand side.
• D)lists items in terms of market values, not historical costs.
• E)uses the market rate of return.

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Definitions:

Maintenance Cost

Expenses incurred in keeping property, equipment, or machinery in efficient operating condition, including both preventive and corrective measures.

Relevant Range

The span of activity levels within which the assumptions made about cost behavior in cost-volume-profit analysis remain valid.

Average Costs

The total costs (fixed and variable) divided by the total output production, giving a per unit cost of production.

Fixed Manufacturing Cost

The portion of total manufacturing costs that does not change with the level of production, such as rent, insurance, and salaries of permanent staff.