Which Method of Dealing with Inflation in Financial Reporting Updates

question 27

Multiple Choice

Which method of dealing with inflation in financial reporting updates assets by applying inflation rates to historical costs?

• A)current replacement cost method
• B)current rate method
• C)temporal method
• D)general purchasing power method

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Definitions:

Variable Cost

Costs that vary directly with the level of production or service activity.

Decentralisation

The distribution of decision-making powers from central authority to lower-level employees or divisions in an organization.

Goal Congruence

A condition in which the goals of the company's various employees and departments align with the overall objectives of the organization.

Motivation

The internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job or subject.