Answer:
Historical costs is objectively and precisely measured, whereas market values can be difficult to estimate, and different analysts would come up with different
values.
Explanation:
In preparing a balance sheet it is customary for a company to value the assets and other items based on historical costs rather than market values.
For example if an asset is purchased at $20,000, this value will reflect in the balance sheet in subsequent years. Or future calculation will be based on this.
Let's say yearly depreciation is $1,000 then after on year the value will be $19,000, after two years $18,000 and so on.
This is more object than market value which varies at any one time.
Market value for an item will vary depending on location and the market.
Answer:
The statement that could be made to the company President is that:
b. This year our accounts receivable turnover was up and our average collection period was down compared to the 2 previous years.
Explanation:
Since the credit sales increased by 20% with overall revenue but the average balance in the accounts receivable remained exactly as the last two year's, it means that the accounts receivable turnover have improved together with the average collection period. Given the noticeable improvements that have been instituted recently, accounts receivable are being collected timely.
