Question

The book value of current assets plus the net book value (NBV) of long-lived assets is defined as ________ cost.

Option 1:
Historical Cost

Option 2:
Replacement Cost

Option 3:
Market Value

Option 4:
Opportunity Cost

Answer 1

The book value of current assets combined with the net book value of long-lived assets defines Historical Cost, representing their original monetary value as listed on the balance sheet.

Step-by-step explanation:

When considering the book value of current assets plus the net book value (NBV) of long-lived assets, we are referring to the Historical Cost. This accounting concept represents the original monetary value of an asset. Historical cost is used in valuing assets on the balance sheet according to their original cost at the time of purchase without considering changes in market value. Replacement cost, market value, and opportunity cost are different concepts and are not used to define this combination of current and long-lived assets at their original purchase value.