Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago,and which would probably now sell for $80,000?
A)The cost principle
B)The accounting equation
C)The separate entity concept
D)The monetary concept

Question

Quizplus · Accepted Answer

Following the cost principle,assets and liabilities are first recorded at cost,which is their cash-equivalent value on the date of the transaction.Later,if an asset's value increases,the increase is generally not recorded under GAAP (unless it is a particular type of financial investment).

Which Concept Should Be Applied When Reporting a Piece of Land