Which of the following statements regarding the use of historical costs and current costs to compute return on investment (ROI) is(are) true?
(A) Historical costs are based on the original costs to acquire a long-term asset, while current costs represent the costs to replace the long-term asset.
(B) For a specific multiple-period project, the return on investment (ROI) computed using current costs will generally be less than the ROI computed using historical costs.
A) Only (A) is true.
B) Only (B) is true.
C) Both of these are true.
D) Neither of these is true.

Question

Quizplus · Accepted Answer

Historical costs refer to the original purchase price of an asset, while current costs are the costs to replace it. ROI using current costs is generally lower because replacement costs are often higher than historical costs, reducing the ROI percentage.

Which of the Following Statements Regarding the Use of Historical