Which one of the following statements is true concerning assets?
A)They are recorded at market value and then adjusted for inflation.
B)They are recorded at market value for financial reporting purposes as historical cost may be arbitrary.
C)Accountants use the term historical cost to refer to the original cost of an asset.
D)Assets are measured using the time-period approach.

Question

Quizplus · Accepted Answer

Accountants use the term historical cost to refer to the original cost of an asset. This is the most common method of measuring assets and is used for both financial reporting and tax purposes. Market value may be used in certain circumstances, such as when determining the value of securities or real estate, but is not the primary method of measuring assets. Inflation may also be taken into consideration when calculating the value of an asset over time, but it is not the initial recording value. The time-period approach is a method of measuring income over a specific time period and is not directly related to measuring assets.

Which One of the Following Statements Is True Concerning Assets