Question

Question 7 2 pts Which of the following may be a limitation of financial statements? Subject to biases of management Provides no information on the company's accounting methods Typically reflects the view of inherently unethical managers Communicates only market values and no historical information 2 pts D Question 8 Which of the following ratios would be of primary importance to a manager in evaluating the success of a new policy of reducing the stock of goods needed to meet customer demand? Total asset turnover Fixed assets turnover Receivables turnover Inventory turnover

Answer 1

Answer:

7) Subject to biases of management.

8) Inventory Turnover

Explanation:

7)

A financial statement is subject to the biases of management. It must obviously be one of the biggest disadvantage of financial statements.

Moreover,to answer the question, the second option is wrong as accounting policies are often clear from financial statements. Also, it doesn't reflect the view of inherently unethical managers typically. It communicates historical cost and not market value.

So the answer is : Subject to biases of management.

8)

Inventory Turnover Ratio is the ratio of inventory with respect to turnover or sales.

Reducing the stock of goods is an inventory policy, and to measure the effect of any reforms in it, this ratio is of primary importance.

So the answer is : Inventory Turnover