To Estimate the Amount of Cash Which Could Be Received

question 104

Multiple Choice

To estimate the amount of cash which could be received if an asset were sold today, you should use the asset's:

• A) Historical cost.
• B) Market value.
• C) Value as shown on the latest statement of financial position.
• D) Book value.
• E) Depreciated historical cost.

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Definitions:

Friedman Rule

A monetary policy rule proposed by economist Milton Friedman, suggesting that the optimal nominal interest rate is zero to eliminate the opportunity cost of holding money.

Deflation

A decrease in the general price level of goods and services, often indicating an economic slowdown.

Inflation

The velocity at which the aggregate price level for goods and services elevates, thereby reducing purchasing capability.

Nominal Interest Rate

The interest rate before adjustments for inflation. It is the rate quoted on loans and deposits.