The measurement principle prescribes that accounting information is based on subjective opinion rather than cost.

Question

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The measurement principle, also known as the cost principle, prescribes that accounting information should be based on actual costs rather than subjective opinions. This principle requires that assets be recorded at their historical cost, which is the amount paid for them at the time of acquisition, rather than at their current market value. This ensures that financial statements accurately reflect the financial position of the business at the time of the statement.

The Measurement Principle Prescribes That Accounting Information Is Based on Subjective