Which of the following is an example of proper accounting when it comes to reporting values on a company's balance sheet?
A)X Company reported its land at the amount it could be sold for on the balance sheet date,which is higher than the original cost of the land.
B)X Company reported its damaged equipment at an amount lower than it originally cost.
C)X Company reported its inventory at its current market value,which is higher than its original cost.
D)X Company reported its notes receivable at the amount it originally loaned to employees,some of whom have since been laid off.

Question

Quizplus · Accepted Answer

Following the cost principle,assets and liabilities are first recorded at cost,which is their cash-equivalent value on the date of the transaction.Later,if an asset's value increases,the increase is generally not recorded under GAAP unless it is a particular type of financial investment (not discussed in this chapter).However,if an asset's value falls,it is generally reported at that lower value.Thus,the amount reported on the balance sheet may not be the asset's current value.

Which of the Following Is an Example of Proper Accounting