Why Is It Useful for a Footnote to the Balance

question 9

Multiple Choice

Why is it useful for a footnote to the balance sheet to give the cost of investment assets individually?

• A)To avoid double taxation when taxes are filed.
• B)To permit estimation of the effect of taxation on the gain upon ultimate sale.
• C)As investment assets often cannot be turned into cash immediately without penalty.
• D)All of the above.
• E)None of the above.

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Definitions:

Income Statement

A financial report that shows a company's revenues, expenses, and profits over a specific period, often a fiscal quarter or year.

Financial Statements

Reports that summarize the financial performance and position of a business, including the balance sheet, income statement, and statement of cash flows.

Debits

Accounting entries that increase asset or expense accounts or decrease liability, equity, or revenue accounts.

Credits

Entries made on the right side of an account in double-entry bookkeeping, which decrease assets or increase liabilities and equity.