The cost-benefit test constraint refers to:
A) the idea that "when in doubt,take the most beneficial action."
B) the benefit of complying with an accounting principle should outweigh the cost of compliance.
C) the recording of assets at their historical cost rather than their fair market value.
D) the requirement that all benefit transactions must conform to "industry practice".

Question

Quizplus · Accepted Answer

The cost-benefit test constraint requires that the benefit of complying with an accounting principle should outweigh the cost of compliance. This means that the benefits gained from following an accounting principle should be greater than the costs incurred to implement and maintain it. This constraint helps ensure that financial statements are prepared in a way that is both reliable and practical.

The Cost-Benefit Test Constraint Refers To