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WAEC Financial Accounting 2009 Question 2

Question 2

Accounting Concepts and Conventions

As a basis for assessing future usage, fixed assets are shown at

  1. A.selling price
  2. B.cost price
  3. C.cost plus residual value
  4. D.net book value
Show the answer and explanation

Answer: B (cost price)

Explanation

Fixed assets are kept for use, not for sale, so the going-concern and historical cost ideas record them at what they cost, not at what they could be sold for.