Which of the following is true of the cost principle?
A) It highlights the proposition that value is not the focus of accounting and is not represented in financial statements.
B) Using this principle results in the subjectivity of value assessments.
C) Under this, costs are measured subjectively on actual basis.
D) It results in reflecting the current values of assets, liabilities, equity, revenues, and expenses shown on the financial statements.

Question

Quizplus · Accepted Answer

The cost principle is a fundamental accounting principle that states that assets should be recorded at their historical cost, that is, the cost at which they were acquired or produced. The focus of accounting is on objective and verifiable data, rather than subjective assessments of value. Therefore, the cost principle highlights the proposition that value is not the focus of accounting and is not represented in financial statements.

Which of the Following Is True of the Cost Principle