The Principle That Indicates That an Asset Should Be Reported

question 6

Multiple Choice

The principle that indicates that an asset should be reported at the price which would be received to sell the asset is the

• A)historical cost principle.
• B)fair value principle.
• C)full disclosure principle.
• D)consistency principle.

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Definitions:

Investment Center

A segment or area of a business responsible for its own revenue, expenses, and assets, and its performance is measured by its return on investment.

Fixed Expenses

These are costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Return On Investment

A measure used to evaluate the efficiency of an investment or compare the efficiencies of several different investments.

Residual Income

The amount of income that an entity has after all costs and expenses, including the cost of capital, have been deducted.