What is the main problem in using a statement of financial position to provide an accurate assessment of the value of a company's equity?
A)Valuable assets such as the company's reputation,the quality of its work force,and the strength of its management are not captured on the statement of financial position.
B)The statement of financial position does not accurately represent the book value of assets held by the company.
C)The equity shown on the statement of financial position does not reflect the market capitalization of the company.
D)Knowing at a single point in time what assets a firm possesses and the liabilities a firm owes does not give any indication of what those assets can produce in the future.
E)The statement of financial position does not provide enough detail about the company's equity.

Question

Quizplus · Accepted Answer

Valuable assets such as the company's reputation, the quality of its workforce, and the strength of its management are not captured on the statement of financial position. These factors can greatly impact the value of a company's equity but are not reflected in the financial statements.

What Is the Main Problem in Using a Statement of Financial