Which of the following valuation approaches converts historical cost dollars by an index such as the Consumer Price Index?
A)Current value
B)Discounted cash flows
C)Replacement cost
D)General price-level adjustment

Question

Quizplus · Accepted Answer

General price-level adjustment is the valuation approach that converts historical cost dollars by an index such as the Consumer Price Index. This is done to adjust for inflation and account for changes in the purchasing power of money over time. The other options, current value, discounted cash flows, and replacement cost, do not involve using an index to adjust historical cost.

Which of the Following Valuation Approaches Converts Historical Cost Dollars