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MC Question 9
Trasten Co operates in an emerging market with a fast-growing economy where prices increase frequently.
Which of the following statements are true when using historical cost accounting compared to current value
accounting in this type of market?
| (1) | Capital employed which is calculated using historical costs is understated compared to current value capital employed |
|---|---|
| (2) | Historical cost profits are overstated in comparison to current value profits |
| (3) | Capital employed which is calculated using historical costs is overstated compared to current value capital employed |
| (4) | Historical cost profits are understated in comparison to current value profits |
A 1 and 2
B 1 and 4
C 2 and 3
D 3 and 4