The accounting concept or principle that is perhaps the greatest single culprit in distorting the results of financial statement analysis is the:
A)Matching principle.
B)Historical cost concept.
C)Conservatism principle.
D)Time value of money concept.

Question

Quizplus · Accepted Answer

The pervasive use of the historical cost concept is probably the greatest single cause of distorted financial statement analysis results. Historical cost produces financial statements that report dollars with differing purchasing power in the same statement For example, historical cost can cause assets such as land to be understated which would impact ratios using long-term assets.

The Accounting Concept or Principle That Is Perhaps the Greatest