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All of the following are valuation principles except
- a)Historical cost.
- b)Present value.
- c)Future value.
- d)Realisable value.
Correct answer is option 'C'. Can you explain this answer?
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All of the following are valuation principles excepta)Historical cost....
Ans:c valuation principles are divided into 4 types:- 1.historical cost 2.current cost 3.realisable value 4.present value so,future value does'nt exist and it is not a kind of valuation principle
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All of the following are valuation principles excepta)Historical cost....
Valuation Principles
Valuation principles are the set of rules and guidelines used for determining the value of an asset or a liability. The following are the commonly used valuation principles:
1. Historical cost
Historical cost is the original cost of an asset or liability at the time of acquisition. It is used to measure the value of an asset or liability based on the actual amount paid for it. It is not adjusted for inflation or changes in market conditions.
2. Present value
Present value is the current value of an asset or liability based on its expected future cash flows. It is calculated by discounting the future cash flows using a discount rate that reflects the time value of money and the risk associated with the asset or liability.
3. Realisable value
Realisable value is the value of an asset if it is sold in the market. It is used when the value of an asset cannot be determined using historical cost or present value.
Valuation Principles - Exclusion
The option 'C' - Future value is incorrect because it is not a valuation principle. Future value refers to the value of an asset or liability at a future date based on its expected future cash flows. It is not a commonly used valuation principle because it does not provide a current value of an asset or liability. Therefore, the correct answer is option 'C'.
Valuation principles are the set of rules and guidelines used for determining the value of an asset or a liability. The following are the commonly used valuation principles:
1. Historical cost
Historical cost is the original cost of an asset or liability at the time of acquisition. It is used to measure the value of an asset or liability based on the actual amount paid for it. It is not adjusted for inflation or changes in market conditions.
2. Present value
Present value is the current value of an asset or liability based on its expected future cash flows. It is calculated by discounting the future cash flows using a discount rate that reflects the time value of money and the risk associated with the asset or liability.
3. Realisable value
Realisable value is the value of an asset if it is sold in the market. It is used when the value of an asset cannot be determined using historical cost or present value.
Valuation Principles - Exclusion
The option 'C' - Future value is incorrect because it is not a valuation principle. Future value refers to the value of an asset or liability at a future date based on its expected future cash flows. It is not a commonly used valuation principle because it does not provide a current value of an asset or liability. Therefore, the correct answer is option 'C'.
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All of the following are valuation principles excepta)Historical cost.b)Present value.c)Future value.d)Realisable value.Correct answer is option 'C'. Can you explain this answer?
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