Different measurement models affect the determination of income and expenses.The different measurement models include:
A) historical cost, fair value, present value.
B) historical cost, direct costs, indirect costs.
C) current cost, historical cost, overhead cost.
D) market value, opportunity cost, historical cost.

Question

Quizplus · Accepted Answer

Historical cost measures assets and liabilities at their original purchase price, fair value measures assets and liabilities at their current market value, and present value measures assets and liabilities at their discounted future cash flows. These different measurement models can affect the determination of income and expenses as they can result in different valuations for an asset or liability, which can impact the calculation of gains, losses, and depreciation/amortization expenses.

Different Measurement Models Affect the Determination of Income and Expenses