The basis upon which assets of an organization is valued is the

Assessment: JAMB UTME - Principles of Accounts - 2012 Subject: Financial Accounting

Question 1 Report

The basis upon which assets of an organization is valued is the
Answer Details
The basis upon which assets of an organization are valued is the historical concept. This concept states that the value of an asset is based on its original cost or purchase price. In other words, when an asset is acquired by an organization, its value is recorded in the financial statements at the cost at which it was acquired. For example, if a company purchases a computer for $1,000, the computer's value will be recorded in the financial statements at $1,000. Even if the market value of the computer increases or decreases over time, the historical cost will still be used to value the asset. The historical concept is important because it provides a reliable and consistent way to value assets over time. It also helps ensure that financial statements accurately reflect the value of an organization's assets at the time they were acquired, which is essential for making informed financial decisions.
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