Which of the Following Statements Is Not Consistent with Generally

question 57

Multiple Choice

Which of the following statements is not consistent with generally accepted accounting principles relating to asset valuation?

• A) Many assets are originally recorded in accounting records at their cost to the business entity.
• B) Subtracting total liabilities from total assets indicates what the owner's equity in the business is worth under current market conditions.
• C) Accountants assume that assets such as office supplies, land, and buildings will be used in business operations, rather than being sold at current market prices.
• D) Accountants prefer to base the valuation of assets upon objective, verifiable evidence rather than upon appraisals or personal opinion.

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Definitions:

Consolidation

The process of combining two or more entities into one, often to streamline operations and reduce costs.

Absorbed Corporation

A company that has been merged into another entity, losing its previous separate identity.

Merger

The combination of two or more companies into a single entity, where one survives and the others cease to exist.

Bankruptcy

A legal process by which individuals or other entities who cannot repay debts to creditors seek relief from some or all of their debts.