Which of the following statements regarding the concepts underlying the balance sheet are true?
A)A company buys land for $5 million dollars in 1983.The land is now worth $15 million.The company should increase the book value of this asset on its balance sheet to reflect its current value.
B)All events affecting the current value of a company are reported on the balance sheet.
C)According to the cost principle,assets are valued at their replacement cost.
D)Under Generally Accepted Accounting Principles,assets are generally written down if the market value declines,but are not written up if the market value increases.

Question

Quizplus · Accepted Answer

Under Generally Accepted Accounting Principles (GAAP), assets are generally written down if their market value declines, but they are not written up if the market value increases. This is due to the conservatism principle, which aims to provide a cautious approach to financial reporting.

Which of the Following Statements Regarding the Concepts Underlying the Balance