Historical Cost

question 72

Multiple Choice

Historical cost:

• A)is determined for each asset on a yearly basis.
• B)is equal to the amount of cash paid less the dollar value of all non-cash consideration given in the exchange.
• C)is a verifiable measure that is relatively free from bias.
• D)is the amount that the business could sell the asset for.

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Definitions:

Price Level

The overall average price of all goods and services currently made in the economy.

Classical Theory

A school of thought in economics that emphasizes free markets, competition, and the minimal involvement of government in the economy.

Supply of Savings

The total amount of savings that individuals and institutions are willing to provide at different interest rate levels.

Interest Rates

Interest rates refer to the cost borrowing money, usually expressed as a percentage of the amount borrowed per annum.