Tom Purchased an Item for $5050 Last Year

question 16

Multiple Choice

Tom purchased an item for $5050 last year. This year, he sold the item to a complete stranger for $7000 and incurred a sum of $250 for advertising it. Which of the following statements is true?

• A) Historical cost is $5050.
• B) Fair value is $7000.
• C) Net realisable value is $6750.
• D) All of the above.

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Definitions:

Draft

A preliminary version of a document or plan that is subject to revision.

Accept

To agree to receive or undertake something offered.

Payee

A payee is the individual or entity to whom a payment is made, typically named or designated in a financial transaction document.

Negotiation

The transfer of a negotiable instrument in such form that the transferee becomes a holder.