Which of the Following Statements Regarding the Concepts Underlying the Balance

question 94

Multiple Choice

Which of the following statements regarding the concepts underlying the balance sheet are true?

• A)A company buys land for $5 million dollars in 1983.The land is now worth $15 million.The company should increase the book value of this asset on its balance sheet to reflect its current value.
• B)All events affecting the current value of a company are reported on the balance sheet.
• C)According to the cost principle,assets are valued at their replacement cost.
• D)Under Generally Accepted Accounting Principles,assets are generally written down if the market value declines,but are not written up if the market value increases.

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Definitions:

Credits

Accounting entries that decrease assets or increase liabilities and equity on the balance sheet.

Debits

In accounting, debits are entries on the left side of an account ledger, indicating increases in asset or expense accounts, or decreases in liability, equity, or revenue accounts.

Credit

An accounting entry that represents an increase in liabilities or equity or a decrease in assets, opposite of a debit.

Offset Side

The side of a transaction that counterbalances the primary entry, ensuring the accounting equation remains balanced.