The underlying basis for the use of historical cost is the:
A)relevance principle.
B)matching principle.
C)comparability principle.
D)reliability principle.

Question

Quizplus · Accepted Answer

The use of historical cost is based on the reliability principle, which states that financial information should be verifiable, faithful representation of the underlying economic events, and free from bias or error. Historical cost is considered reliable because it is based on objective, verifiable data from past transactions. While relevance, matching, and comparability are important principles in accounting, they are not specifically related to the use of historical cost.

The Underlying Basis for the Use of Historical Cost Is