Question

State the generally accepted accounting principle applicable to balance sheet valuation of each of the following assets.(a) Trade accounts receivable.(b) Land.(c) Inventories.(d) Trading securities (common stock of other companies).(e) Prepaid expenses.

Answer 1

Answer:

Following the generally accepted accounting principle applicable to balance sheet valuation of each item mentioned, it should be valued according to the valuation set by the standard.

Trade accounts receivable should be valued at its net realizable value.

The land should be valued at its cost.

The inventories should be valued at its lower of cost or market value.

The trading securities should be valued at its fair value.

And prepaid expenses should be valued at its cost less the amount already used from the prior periods.