Which of the Following Is an Argument Against Using Historical

question 128

Multiple Choice

Which of the following is an argument against using historical cost in accounting?

• A) Fair values are more relevant.
• B) Historical costs are based on an exchange transaction.
• C) Historical costs are reliable.
• D) Fair values are subjective.

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Definitions:

Overhead Resources

The ongoing operational costs of running a business that are not directly tied to producing goods or services.

Plantwide Overhead Rate

A single overhead absorption rate calculated for an entire manufacturing plant and applied to all units produced, simplifying the allocation of indirect costs.

Overhead Cost

Expenses related to the operation of a business that cannot be directly linked to a specific product or service.

Simplicity

The quality of being easy to understand or use; the absence of complexity or complication.