The use of acquisition cost less depreciation in valuing an asset on the balance sheet is the logical result of the _____ accounting convention.
A)continuity
B)conservatism
C)cost-benefit
D)materiality

Question

Quizplus · Accepted Answer

The continuity (or going concern) accounting convention assumes that a business will continue to operate indefinitely, allowing for the use of acquisition cost less depreciation in valuing assets. This method reflects the ongoing use of the asset in the business rather than its immediate sale value.

The Use of Acquisition Cost Less Depreciation in Valuing an Asset