Financial Reporting and Changing Prices

Question 1

What cost is the actual exchange value in the dollars at that time an asset was acquired or a liaility was assumed?

Answer 1

Historical cost

Question 2

What cost would be incurred at the present time, the replacement cost or use the recoverable cost if lower?

Answer 2

Current cost

Question 3

What dollars are unadjusted for changes in purchasing power?

Answer 3

Nominal dollars

Question 4

What dollars are restated based on calculations of CPI ratios?

Answer 4

Constant dollars

Question 5

What method is based on historic prices without restatement for changes in the purchasing power of the dollar?

Answer 5

Historic cost/Nominal dollars

Question 6

What method is based on historic prices adjusted for changes in the general purchasing power of the dollar?

Answer 6

Historic cost/Constant dollars

Question 7

What method is based on current cost without restatement for changes in the general purchasing power of the dollar?

Answer 7

Current cost/Nominal dollars

Question 8

What method is based on current cost adjusted for changes in the general purchasing power of the dollar?

Answer 8

Current Cost/Constant dollars

Question 9

Are monetary assets fixed?

Answer 9

Yes

Question 10

What does non-monetary assets do in value with inflation and deflation?

Answer 10

Fluctuate

Question 11

Does historical cost/nominal dollars deal with inflation and appreciation?

Answer 11

No, no

Question 12

Does historical cost/constant dollars deal with inflation and appreciation?

Answer 12

Yes, no

Question 13

Does current cost/nominal dollars deal with inflation and appreciation?

Answer 13

No, yes

Question 14

Does current cost/constant dollars deal with inflation and appreciation?

Answer 14

Yes, yes