The Use of Replacement Cost of Assets for Purposes of Calculating

question 65

Multiple Choice

The use of replacement cost of assets for purposes of calculating return on investment (ROI) has the advantage of:

• A) Historical accuracy.
• B) Being a relevant measure of the level of investment in a continuing business.
• C) Objectivity.
• D) Consistency with generally accepted accounting principles (GAAP).
• E) Avoiding the need for developing estimates of current cost.

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Definitions:

Discount

A reduction from the usual cost of an item or service, typically offered to incentivize purchases.

Electrical Generators

Machines that convert mechanical energy into electrical energy for use in an external circuit.

Contract

An accord between two or more parties that is recognizable by law and can be legally enforced.

Fax Office

A service location where fax communications are sent and received, historically used for transmitting documents.