Which of the following generally is considered a limitation of the balance sheet?
A)The balance sheet reflects the current value of a business.
B)The balance sheet reflects the instability of the dollar.
C)Balance sheet formats and classifications do not vary to reflect industry differences.
D)Due to measurement problems, some enterprise resources and obligations are not reported on the balance sheet.

Question

Quizplus · Accepted Answer

The limitation of the balance sheet is that because of measurement problems, some enterprise resources and obligations are not reported on the balance sheet. The balance sheet only includes items that can be measured and assigned a monetary value, which means that intangible assets such as brand reputation or employee skills may not be reflected. Liabilities such as warranties or contingent liabilities may not be reported because of uncertainty in their value.

Which of the Following Generally Is Considered a Limitation of the Balance