Question

Which of the following is not a generally accepted accounting principle relating to the valuation of assets? The going-concern assumption - one reason for valuing assets such as buildings and equipment at cost rather than at their current market values is the assumption that the business will use these assets rather than sell them. The objectivity principle - accountants prefer to use objective, rather than subjective, information as the basis for accounting information. The cost principle - in general, assets are valued at cost, rather than at estimated market values. The safety principle - assets are valued at no more than the value for which they are insured.

Answer 1

Answer:

The going-concern assumption - one reason for valuing assets such as buildings and equipment at cost rather than at their current market values is the assumption that the business will use these assets rather than sell them.

Explanation:

Accounting valuation is the process by which a company compares it's assets and liabilities for reporting purposes.

The generally accepted accounting practices (GAAP) are a set of rules that guide accountants in recording and reporting financial transactions.

These principles ensure uniformity in how transactions are treated by all accountants.

There are 5 of these principles:

- Revenue principle

- Expense principle

- Matching principle

- Cost principle

- Objectivity principle

The going concern assumption is not part of GAAP but rather is an accounting concept that assumes that a business will remain in operation.

In financial statements it is required disclosures are made when a business is going to fail. In this instance it is no longer a going concern