Practice Quiz

CLEP Financial Accounting Exam Prep

Category - CLEP Financial Accounting Test Practice Questions

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Which of the following statements is correct?

I The book value of a corporation can be calculated from the balance sheet.
II The market value of a corporation can be calculated from the balance sheet.
  1. I
  2. II
  3. I and II
  4. Neither statement is correct.
  5. There is not enough information to determine if either statement is correct.
Explanation
Answer - A - The book value of a corporation can be calculated from the balance sheet (market value cannot).

Key Takeaway: Stockholder’s equity on the balance sheet can be used to calculate book value for a corporation. Market value must have additional information provided; it cannot be determined using the balance sheet.
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