The accounting principle that requires financial statement information to be based on costs incurred in business transactions, and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:
A)Accounting equation.
B)Cost principle.
C)Going concern principle.
D)Business entity principle.
E)Revenue recognition principle.

Question

Quizplus · Accepted Answer

The principle described is the cost principle, also known as the historical cost principle. This principle requires that assets and services be recorded at their original cost, which is typically the cash or cash-equivalent amount paid. This principle provides a reliable basis for financial reporting and helps to ensure consistency in financial statements over time.

The Accounting Principle That Requires Financial Statement Information to Be