Deck 6: Current Exit Value and Mixed Values

Question 1

Which of the following is NOT an advantage of deprival cost accounting?

A)it allows for the proper maintenance of the 'business substance'
B)it values resources at expected proceeds if they are to be replaced.
C)it provides a balance sheet based on current value.
D)it is consistent with accounting concepts.

Answer 1

B

Question 2

Deprival value (DV)has a clearly definable concept of capital maintenance.

Answer 2

True

Question 3

The deprival value of an asset can be defined as the loss that a rational business person would suffer if deprived of the asset.

Answer 3

True

Question 4

Which of the following is NOT a disadvantage of deprival cost accounting?

A)it is more subjective than replacement cost accounting.
B)it fails to concentrate attention on long run attention on long run effectiveness.
C)it fails to give information about the internal usefulness of assets.
D)it is less realistic than replacement cost.

Question 5

In a practical business context disposal value rarely matches replacement cost.

Question 6

Net realisable value can be defined as,"the proceeds after deducting additional avoidable expenses of disposal".

Question 7

Edwards & Bell defined Current values as;

A)values actually realized during the current period for goods sold.
B)values potentially realized during the current period for goods to be sold.
C)value of goods held during the current period.
D)value of good acquired during the current period.

Question 8

Which of the following is NOT a disadvantage of current exit value accounting;

A)it fails to follow the going concern convention.
B)it considered to be subjective.
C)it only focusses on long- run operational effectiveness.
D)it fails to give useful information about internal usefulness of assets.

Question 9

Which of the following is NOT an advantage of current exit value accounting;

A)it follows the economic 'opportunity cost' principle.
B)exit values facilitate comparison.
C)the concept of realisable value is best understood by professional accountants.
D)it is already widely used.

Question 10

Replacement cost valuations are usually more subjective than deprival valuations.