Which One of the Following Statements Is NOT True

question 8

Multiple Choice

Which one of the following statements is NOT true?

• A) Replacement cost and adjusted book value are cost-based valuation approaches.
• B) The replacement cost approach involves restating the value of the individual assets in a business to reflect their fair market values.
• C) The replacement cost of a business is the cost of duplicating the assets of the business in their present form as of the valuation date.
• D) The replacement cost valuation approach is generally used to value individual assets within a business when they are being insured.

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Definitions:

Dividends

Payments made by a corporation to its shareholders out of its profits or reserves.

Tax-exempt Interest

Interest income that is not subject to federal income tax, such as that earned from certain municipal bonds.

Interest on a Savings Account

The amount paid by a bank or financial institution to depositors for holding money in a savings account.

Municipal Bonds

Municipal bonds are debt securities issued by states, cities, and other governmental entities to fund public projects, and typically offer tax-free interest payments to investors.