Historical-cost-based accounting measures are very good for evaluating economic returns on new investments.

Question

Quizplus · Accepted Answer

Historical-cost-based accounting measures are not very good for evaluating economic returns on new investments because they do not take into account changes in the value of money, inflation, or changes in the market conditions that may affect the value of the investment over time. Instead, methods like present value analysis or discounted cash flow analysis may be more suitable for evaluating economic returns on new investments.

Historical-Cost-Based Accounting Measures Are Very Good for Evaluating Economic Returns