Question

1. Valuing assets on financial statements at the amount of cash or other fair value paid for them at the time of the assets’ acquisition most closely describes which measurement of financial statement elements?
   1. Current cost.
   2. Historical cost.
   3. Net Realizable Value.
   4. Net Present Value.
2. Which of the below listed accounting elements presented in financial statements is most closely related to a company’s annual performance?
   1. Current assets.
   2. Expenses.
   3. Liabilities.
   4. Owners’ Equity.
3. A transaction where a company receives money from customers for products to be delivered in the future should be recorded as
   1. Revenue and an asset
   2. An asset and a liability
   3. Revenue and a liability

Answer 1

Answer 1 : a. Historical cost

as Historical cost is the cost at which asset is acquired at the time of its acquisition it is the actual amount incurred for bringing the asset to workable condition

Answer 2 b. Expense

as

It is part of income statement so helps in assesssing the financial performance of the entity

Answer 3 b. An asset and a liability

As

in such transaction cash will be debited as an asset and liability as deferred revenue will be credited so there will be an asset and a liability

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