CFA® Level 1: Accounting and Assets

Accounting for Assets in CFA® Level 1 Exam

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Question

For accounting purposes, which of the following is/are TRUE about assets?

I. Assets are future benefits whose values are known today.

II. Assets are generated by past transactions or events.

III. Assets include the value of residual ownership of the firm.

IV. Assets are best viewed as sources of future cash flows.

Answers

Explanations

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A. B. C. D.

C

Assets are defined as "probable future benefits obtained or controlled by a particular entity as a result of past transactions or events." III refers to "Equity" while IV is not correct since the benefits need not be solely in the form of cash.

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