All of the Following Are Disadvantages of Fair Value Use

question 15

Multiple Choice

All of the following are disadvantages of fair value use except:

• A) fair values may not be readily obtainable.
• B) fair values may cause more fluctuations as change occurs from period to period.
• C) comparability between companies may be impacted by different fair value measurement.
• D) fair values can only be used on balance sheet accounts.

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Definitions:

Balance Sheet

A financial statement that gives a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and shareholders' equity.

Excess of Revenue

The amount by which revenue exceeds the expenses in a given period, indicating profit.

Expenses Incurred

Costs that a company has become legally obligated to pay, often in the course of its normal business operations.

Capital

Financial assets or the financial value of assets, such as cash and securities, owned by an individual or organization, especially those used to start or operate a business.