A Limitation of the Statement of Financial Position in Portraying

question 29

Multiple Choice

A limitation of the statement of financial position in portraying the financial position of an entity is:

• A)items which cannot be measured in money are not included.
• B)the historical cost approach means that assets are not shown at their estimated market values.
• C)there is no adjustment to values for inflation.
• D)All of the above are limitations.

---

Definitions:

Herfindahl Index

A measure of market concentration that calculates the sum of the squares of the market shares of the firms within an industry, used to assess the competition level.

Market Shares

The percentage of an industry's sales that a particular company controls.

Conglomerate Merger

A type of merger where two or more companies in unrelated business areas combine operations.

Buyer-Seller Relationship

The interactions and exchanges between a buyer and a seller, including transactions, communication, and any long-term engagements.