Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago,and which would probably now sell for $80,000?
A)The cost principle
B)Conservatism
C)The separate entity concept
D)The monetary concept

Question

Quizplus · Accepted Answer

The cost principle states that assets should be recorded at their historical cost. Therefore, the land should still be reported at its original cost of $50,000, even if it is now worth $80,000. This principle is important for maintaining the accuracy and reliability of financial statements.

Which Concept Should Be Applied When Reporting a Piece of Land