Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

'Current Cost' in accounting refers to the replacement cost of an asset, which is the amount of money that would currently be required to replace an asset with a similar one. This concept is particularly relevant in contexts where inflation or changes in market conditions affect the value of assets over time. By determining the replacement cost, businesses can gain insights into the real-time expenses they may incur to maintain or upgrade their assets, ensuring they remain properly accounted for on the balance sheet and reflect true economic value.

The other options are related but do not capture the essence of 'Current Cost' in the same way. Initial purchase cost pertains to what was paid when the asset was first acquired, which may not reflect its current value. Market value can fluctuate based on external factors and isn't strictly tied to the idea of replacement. Historical cost represents the original purchase price adjusted for depreciation, not the current value of replacing the asset.