Limitations of the Income Statement Include All of the Following

question 23

Multiple Choice

Limitations of the income statement include all of the following EXCEPT

• A) items that cannot be measured reliably are not reported.
• B) only actual amounts are reported in determining net income.
• C) income measurement involves the use of estimates.
• D) income numbers are affected by the accounting methods used.

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Definitions:

Fair Value Hedge

A hedge that protects against changes in the fair value of an asset, liability, or an unrecognized firm commitment that is attributable to a particular risk.

Forward Contract

A customized contract between two parties to buy or sell an asset at a specified price on a future date.