The amounts reported in the accounts for assets used in operations are based on their costs.This practice is best justified by the:
A)Cost principle
B)Going-concern principle
C)Objectivity principle
D)Business entity principle
E)Revenue recognition principle

Question

Quizplus · Accepted Answer

The cost principle requires that assets be recorded at their historical cost, which is the amount paid to acquire them. This is the most reliable measure for the value of an asset and is therefore the best justification for reporting assets at cost. The going-concern principle relates to the assumption that the entity will continue to operate in the foreseeable future, while the objectivity principle requires that accounting information be supported by objective evidence. The business entity principle requires that the business be treated as a separate accounting entity from its owner(s), while the revenue recognition principle relates to the timing of when revenue should be recognized.

The Amounts Reported in the Accounts for Assets Used in Operations