What Is the Main Problem in Using a Statement of Financial

question 29

Multiple Choice

What is the main problem in using a statement of financial position to provide an accurate assessment of the value of a company's equity?

• A)Valuable assets such as the company's reputation,the quality of its work force,and the strength of its management are not captured on the statement of financial position.
• B)The statement of financial position does not accurately represent the book value of assets held by the company.
• C)The equity shown on the statement of financial position does not reflect the market capitalization of the company.
• D)Knowing at a single point in time what assets a firm possesses and the liabilities a firm owes does not give any indication of what those assets can produce in the future.
• E)The statement of financial position does not provide enough detail about the company's equity.

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