BALANCE SHEET AND STATEMENT OF CASH FLOWS

Liquidity refers to the ability of an enterprise to pay its debts as they mature.

• TRUE
• False

The balance sheet omits many items that are of financial value to the business but cannot be recorded objectively.

• TRUE
• False

Financial flexibility measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows.

• TRUE
• False

Companies frequently describe the terms of all long-term liability agreements in notes to the financial statements.

• TRUE
• False

An asset which is expected to be converted into cash, sold, or consumed within one year of the balance sheet date is always reported as a current asset.

• True
• False

Land held for speculation is reported in the property, plant, and equipment section of the balance sheet.

• True
• False

The account form and the report form of the balance sheet are both acceptable under GAAP.

• True
• False

Because of the historical cost principle, fair values may not be disclosed in the balance sheet.

• True
• False

Companies have the option of disclosing information about the nature of their operations and the use of estimates in preparing financial statements.

• True
• False

Companies may use parenthetical explanations, notes, cross references, and supporting schedules to disclose pertinent information.

• True
• False