Major methods of asset valuation


Choose the right answer:

1. A statement that reports the financial position (assets, liabilities, and stockholders' equity) of an accounting entity at a point in time is called a(an):

Income statement

Statement of retained earnings

Balance sheet

Statement of cash flows

Report of management

2. Two major methods of asset valuation are:

historical cost and future cost

historical cost and acquisition cost

historical cost and replacement cost

acquisition cost and future cost

3. _____ is the most important financial metric to review to determine long-term financial viability.

Return on equity

Total margin

Days cash on hand

Hospital cost index

None of the above

4. What is/(are) the primary determinant(s) of firm value?

Profit

Investment

Cost of capital

All of above

5. What are the major reasons for accrual accounting?

6. What is an accounting entity?

7. The HC method, which uses unadjusted historical costs, does not take into account depreciation expenses, purchasing power, and unrealized gains in replacement value. Despite these weaknesses as a financial reporting method, the HC method is used more frequently for accounting purposes than other methods, such as the HC-GPL, CV, and CV-GPL methods. Why is this so?

8. What is the basic accounting equation?

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