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Comment on the Following Statement: "I Decided to Buy a Car

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Essay

Comment on the following statement: "I decided to buy a car from a dealer in a town 100 miles away because he was offering a price that was $100 lower than the dealer in my hometown. Therefore, I saved $100."


Definitions:

Historical Cost Principle

A fundamental accounting rule stating that assets must be logged and presented at the cost they were originally bought for.

Going Concern Principle

An accounting assumption that a company will continue operating and not go bankrupt or be liquidated in the foreseeable future.

Straight-Line Deprecation

A method of calculating the depreciation of an asset, dividing its cost by the number of years it is expected to be useful.

Book Value

The net value of a company's assets, found by deducting total liabilities and intangible assets from total assets.

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