Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 2 of 4
Management's intentional structuring of a lease transaction as an off-balance sheet item (operating lease) illustrates how GAAP requirements may result in the quality of financial reporting being distorted. True or False?
User Contributed Comments 3
| User | Comment |
|---|---|
| kalps | FALSE, as GAAP requires disclosure of commitments under CL for the future five years |
| db28luke | GAAP does require disclosure, but it is usually buried near the end of the footnotes. Most people don't get that far. |
| poomie83 | Umm the question is refering to op lease - therefore true |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
identify financial reporting choices and biases that affect the quality and comparability of companies' financial statements and explain how such biases may affect financial decisions;
evaluate the quality of a company's financial data and recommend appropriate adjustments to improve quality and comparability with similar companies, including adjustments for differences in accounting standards, methods, and assumptions;
evaluate how a given change in accounting standards, methods, or assumptions affects financial statements and ratios;
analyze and interpret how balance sheet modifications, earnings normalization, and cash flow statement related modifications affect a company's financial statements, financial ratios, and overall financial condition.
CFA® 2025 Level II Curriculum, Volume 2, Module 15.