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

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 if the cost of complying with an accounting principle is higher than the benefit gained from doing so, then the principle does not need to be followed. It is a practical approach to accounting, which aims to balance the benefits of accurate financial reporting with the costs of providing it.

The Cost-Benefit Test Constraint Refers To