Replacement cost accounting __________ income,but __________ assets and ____________ the debt-to-assets ratio.

Question

Quizplus · Accepted Answer

Replacement cost accounting leads to a lower reported income because replacing assets at current prices may be more expensive than their original purchase prices. However, it increases the reported value of assets since they are being recorded at their current replacement cost rather than their historical cost. This, in turn, lowers the debt-to-assets ratio since the denominator's value (total assets) is higher, resulting in a lower ratio.

Replacement Cost Accounting __________ Income,but __________ Assets and ____________ the Debt-To-Assets

Replacement Cost Accounting Income,but Assets and ____ the Debt-To-Assets