Replacement Cost Accounting (Current Cost Method) During a Period of Inflation

question 62

Multiple Choice

Replacement cost accounting (current cost method) during a period of inflation will usually

• A) increase assets, decrease net income before taxes, and lower the return on equity.
• B) increase assets, increase net income before taxes, and increase the return on equity.
• C) decrease assets, increase net income before taxes, and increase the return on equity.
• D) None of the options apply.

---

Definitions:

Tax Revenues

The income that is gained by governments through taxation, which is used to fund public services and government obligations.

National Income

The total amount of money earned within a country from the production of goods and services over a specific period of time.

National Debt

The cumulative sum of funds that a nation's government owes, often acquired by issuing bonds.

GDP

The GDP is the comprehensive market valuation of all end products and services made within a nation's borders during a certain period.