Valuing assets at their liquidation values rather than their cost is inconsistent with the
A) periodicity assumption.
B) historical cost principle.
C) matching principle.
D) economic entity assumption.

Question

Quizplus · Accepted Answer

Valuing assets at their liquidation values instead of their historical cost violates the historical cost principle, which requires that assets be recorded at their original acquisition cost. The periodicity assumption relates to the timing of financial statements, the matching principle relates to the matching of incurred expenses with related revenues, and the economic entity assumption relates to treating the business as a separate entity from its owners.

Valuing Assets at Their Liquidation Values Rather Than Their Cost