Which method of accounting for changing prices (inflation) updates assets by applying inflation rates to historical costs?
A)Current replacement cost method
B)Current rate method
C)Temporal method
D)General purchasing power method

Question

Quizplus · Accepted Answer

The General purchasing power method updates assets by applying inflation rates to historical costs to reflect changes in the general purchasing power of the currency. This method is designed to maintain the purchasing power of the reported amounts and is therefore the best choice for accounting for changing prices (inflation).

Which Method of Accounting for Changing Prices (Inflation) Updates Assets