Question

In: Accounting

A limitation of the balance sheet that is not also a limitation of the income statement...

A limitation of the balance sheet that is not also a limitation of the income statement is

  • A. the use of judgments and estimates

  • B. omitted items

  • C. the numbers are affected by the accounting methods employed

  • D. valuation of items at historical cost

Solutions

Expert Solution

Ans: D.valuation of items at historical cost

Historical cost :-A historical cost is a measure of value used in accounting in which the price of an asset on the balance sheet is based on its nominal or original cost when acquired by the company. The historical-cost method is used for assets in the United States under generally accepted accounting principles (GAAP).

Reason:- Income statement is prepared on accrual basis.

In balance sheet we record at historical cost.Therefore states that it's a limitation to balance sheet not for Income statement

ekkarill92 answered 1 year ago
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