Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more
A) verifiable.
B) relevant.
C) indicative of the entity's purchasing power.
D) conservative.

Question

Quizplus · Accepted Answer

Proponents of historical cost argue that since historical cost is based on actual transactions and objective evidence, it is more verifiable than other alternatives like fair value. This makes financial statements more reliable and trustworthy for users. While historical cost may not always be the most relevant or indicative of the entity's current values or future potential, it is still preferred by many accountants and regulators due to its verifiability. The argument of conservatism is debatable and not applicable in all cases.

Proponents of Historical Cost Ordinarily Maintain That in Comparison with All