Which of the following situations does not base an accounting measure on present values?
A) Pensions.
B) Prepaid insurance.
C) Leases.
D) Sinking funds.

Question

Quizplus · Accepted Answer

Prepaid insurance is not based on present values, as it is a prepayment for future insurance coverage and not directly related to an estimate of future cash flows. The other options (pensions, leases, sinking funds) all involve estimating future cash flows and discounting them to their present value in order to accurately measure and report accounting transactions.

Which of the Following Situations Does Not Base an Accounting