Valuation of Assets Under Generally Accepted Accounting Principles

question 26

Essay

Valuation of assets under generally accepted accounting principles
Under generally accepted accounting principles,the assets owned by a business are reported in the balance sheet at their historical cost.Identify and briefly explain two accounting principles other than the cost principle that support the valuation of assets at cost in the balance sheet.

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Definitions:

Floatation Costs

The expenses incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Record Date

The specific date set by a company to determine the shareholders who are eligible to receive dividends or participate in corporate actions.

Declaration Date

The date on which a company's board of directors announces its next dividend payment, including the amount to be paid and the record and payment dates.

Ex-dividend Date

The specific date on which a stock is traded without its dividend rights, meaning any subsequent buyer will not receive the next dividend payment.