What is the process of estimating what an item is worth called?

• A. Assessment
• B. Valuation
• C. Appraisal
• D. Estimation

Answer: (B)

The process of estimating what an item is worth is known as valuation. Valuation involves determining the monetary value of an asset or a liability, which can be based on various factors including market conditions, replacement costs, and other economic indicators. This term is widely used in finance, accounting, insurance, and real estate to provide a formal assessment of value that can inform transactions, reporting, and regulatory compliance.

In many contexts, valuation can include methodologies such as discounted cash flow analysis or comparable sales analysis, making it a comprehensive term that encompasses the various factors that contribute to determining worth. Understanding valuation is essential in numerous fields, as it informs decisions related to buying, selling, insuring, or otherwise managing property and assets.