Which of the Following Statements Regarding the Use of Historical

question 61

Multiple Choice

Which of the following statements regarding the use of historical costs and current costs to compute return on investment (ROI) is(are) true? (A) Historical costs are based on the original costs to acquire a long-term asset,while current costs represent the costs to replace the long-term asset.(B) For a specific multiple-period project,the return on investment (ROI) computed using current costs will generally be less than the ROI computed using historical costs.

• A) Only (A)is true.
• B) Only (B)is true.
• C) Both (A)and (B)are true.
• D) Neither (A)and (B)is true.

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Definitions:

Binding Price Ceilings

Regulatory limits on the price of goods and services that are set below the market equilibrium price, causing shortages.

Consumers

People or organizations that use economic goods and services for personal, household, or organizational purposes.

Price Ceilings

A legal maximum on the price at which a good can be sold, often set by government.

Sellers

Sellers are individuals or entities that offer goods or services in exchange for payment.