- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 22. Understanding Balance Sheets
- Subject 1. Components and Format of the Balance Sheet
CFA Practice Question
Select the correct statement(s):
II. The current ratio is intended to indicate the long-run liquidity position of the firm.
I. Under the cash-basis method, warranty costs are charged to expenses as they are paid.
II. The current ratio is intended to indicate the long-run liquidity position of the firm.
A. I only
B. II only
C. Neither is correct
User Contributed Comments 5
| User | Comment |
|---|---|
| Yuyan | Is the trade-in allowance on the old plant asset the same thing as the fair value of this asset? |
| cbb1 | Trade-in allowance equals FMV of asset or selling price of asset, but don't recognize gain, simply assign book value of old asset to new asset. Basis of new asset is cash plus book value of old asset. |
| danlan | Without income-tax method, A is right. |
| gill15 | Tricked...without doing questions i would get whooped on this exam... Current ratio fo SHORT TERM liquidity obligations. |
| bidisha | Word Current = short |