The valuation of assets in the balance sheet is based primarily upon:
A)What it would cost to replace the assets.
B)Cost,because cost is usually factual and verifiable.
C)Current fair market value as established by independent appraisers.
D)Cost,because in the event of liquidation,the assets would be sold at an amount equal to their original cost.

Question

Quizplus · Accepted Answer

The valuation of assets in the balance sheet is based primarily upon cost because it is usually factual and verifiable. While current fair market value and replacement costs may influence the valuation, the cost is the most objective measure and is the basis for the historical cost principle of accounting. The fact that assets may be sold at a lower or higher price in the event of liquidation does not affect the initial valuation of the asset.

The Valuation of Assets in the Balance Sheet Is Based