CFA Institute Exam CFA-Level-I Topic 2 Question 2 Discussion

Actual exam question for CFA Institute's CFA-Level-I exam

Question #: 2
Topic #: 2

[All CFA-Level-I Questions]

Which of the following would not be a limitation of the balance sheet?

ALong-lived assets may not reflect their market value because they are stated at historical cost.

BSignificant assets and liabilities may be omitted because GAAP does not require their inclusion.

CGAAP permits companies to delay recognition of value changes, such as employee benefit plans.

DSome assets and liabilities are carried at historical cost bearing little relationship to their real market value.

Show Suggested Answer

Suggested Answer: C

by Francene at Aug 27, 2024, 09:58 PM

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Joseph

1 months ago

The balance sheet is like a snapshot of a company's financial health - it's not the whole movie, you know?

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Cherrie

1 months ago

Wait, is 'not a limitation' a trick question? I'm scratching my head on this one.

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Flo

9 days ago

One limitation of the balance sheet is that it only shows a snapshot in time.

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Cassandra

17 days ago

No, it's not a trick question. Let me help you out.

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Coral

1 months ago

The balance sheet doesn't capture intangible assets like brand value, which is definitely a limitation.

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Miesha

23 days ago

It's important to consider the limitations of the balance sheet when analyzing a company's financial position.

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Annelle

29 days ago

That's true, the balance sheet does have limitations in capturing certain assets.

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Gracie

1 months ago

Intangible assets like brand value are not included in the balance sheet.

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Hyun

2 months ago

Lack of fair value accounting for some assets and liabilities is a limitation, not a strength.

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Raul

14 days ago

Fair value accounting may not accurately reflect the true value of certain assets.

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Refugia

15 days ago

Not all assets and liabilities are recorded at fair value on the balance sheet.

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Marjory

18 days ago

It can be difficult to determine the fair value of certain assets.

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Mickie

2 months ago

Fair value accounting can be subjective.

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Deane

2 months ago

The balance sheet doesn't show future cash flows, which is a key limitation.

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Sol

1 months ago

The balance sheet doesn't consider intangible assets.

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Jess

2 months ago

Future cash flows are not included in the balance sheet.

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Latosha

2 months ago

It doesn't reflect the current market value of assets.

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Alisha

2 months ago

Balance sheet only shows a snapshot in time.

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Mendy

2 months ago

I agree with both of you. Another limitation could be that it doesn't reflect the market value of assets.

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Tatum

2 months ago

That's true, but another limitation could be that it doesn't include intangible assets.

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Charolette

2 months ago

I think one limitation could be that it only shows a snapshot in time.

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