Which of These Arguments Is Not a Criticism of Historical

question 37

Multiple Choice

Which of these arguments is not a criticism of historical cost valuation?

• A)The historical cost allocation system is based on the matching principle
• B)The derived profit does not measure contemporary resource usage
• C)Valuation of firms based on outdated historical costs is not useful for economic decision-making
• D)B and C

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Definitions:

Foreign Translation

The process of converting the financial statements of a company from one currency to another, often for consolidation and reporting purposes.

Goodwill

An intangible asset reflecting the excess value of a business above its net tangible assets, often arising from acquisitions.

Consolidated Balance Sheet

A financial statement showing the combined assets, liabilities, and equity of a parent company and its subsidiaries.

Acquisition Method

An accounting technique used to consolidate the financial statements of a parent company and its subsidiaries.