Math  /  Data & Statistics

QuestionThe statement of financial position
Select one: a. Makes very limited use of judgments and estimates. b. All of the choices are correct regarding the statement of financial position. c. Uses fair value for most assets and liabilities. d. Omits many items that are of financial value.

Studdy Solution

STEP 1

1. The statement of financial position refers to a balance sheet, a fundamental financial statement.
2. The problem requires identifying the correct characteristic of the statement of financial position among the given options.
3. The context involves understanding accounting principles and practices.

STEP 2

1. Analyze each option provided.
2. Determine which option accurately describes a characteristic of the statement of financial position.

STEP 3

Analyze option (a): "Makes very limited use of judgments and estimates."
The statement of financial position often requires significant judgments and estimates, such as assessing the useful life of assets, estimating bad debts, and determining fair values.
Option (a) is not correct. \text{Option (a) is not correct.}

STEP 4

Analyze option (b): "All of the choices are correct regarding the statement of financial position."
To verify this, we need to examine the other options (c) and (d) for correctness. If any of them are incorrect, then option (b) is also incorrect.
Option (b) depends on the correctness of options (a), (c), and (d). \text{Option (b) depends on the correctness of options (a), (c), and (d).}

STEP 5

Analyze option (c): "Uses fair value for most assets and liabilities."
The statement of financial position often includes assets and liabilities at historical cost or fair value, depending on the accounting standards and the specific items.
Option (c) is partially correct but may not apply to all assets and liabilities. \text{Option (c) is partially correct but may not apply to all assets and liabilities.}

STEP 6

Analyze option (d): "Omits many items that are of financial value."
The statement of financial position may omit intangible assets, human resources, and other items with financial value due to measurement difficulties or accounting standards.
Option (d) is correct, as some valuable items are not recorded on the balance sheet. \text{Option (d) is correct, as some valuable items are not recorded on the balance sheet.}

STEP 7

Determine the most accurate statement about the statement of financial position.
Based on the analysis: - Option (a) is incorrect. - Option (c) is partially correct but not universally applicable. - Option (d) is correct.
Since not all choices are correct, option (b) is not correct.
The correct answer is (d): "Omits many items that are of financial value." \text{The correct answer is (d): "Omits many items that are of financial value."}
Solution: d. Omits many items that are of financial value.

Was this helpful?

Studdy solves anything!

banner

Start learning now

Download Studdy AI Tutor now. Learn with ease and get all help you need to be successful at school.

ParentsInfluencer programContactPolicyTerms
TwitterInstagramFacebookTikTokDiscord