When making ﬁnancial decisions related to assets, you should:
A) Always consider market values.
B) Place more emphasis on book values than on market values.
C) Rely primarily on the value of assets as shown on the statement of ﬁnancial position.
D) Place primary emphasis on historical costs.
E) Only consider market values if they are less than book values.

Question

Quizplus · Accepted Answer

When making financial decisions related to assets, it is important to consider market values because they reflect the current value of the asset in the market. Book value, on the other hand, is simply the historical cost of the asset minus any accumulated depreciation and may not provide an accurate picture of the asset's current value. The statement of financial position may provide information on the book value of assets, but market values should also be taken into account when making financial decisions. Historical costs are not relevant to current financial decision making.

When Making ﬁNancial Decisions Related to Assets, You Should