Home » MCQs » Commerce MCQs » Generally Accepted Accounting Principles MCQs

What is Replacement Cost?

13. What is Replacement Cost?

1. Any cost that has not yet been charged to the expense
2. The amount of money a business must currently spend to replace an essential asset
3. Maintaining an account tied to a certain asset
4. The value of a company according to the stock market

Answer: B) The amount of money a business must currently spend to replace an essential asset

Explanation:

Replacement cost is a term alluding to how much cash a business should at present spend to supplant a fundamental resource like a land property, venture security, a lien, or another thing, with one of the equivalents of higher worth.