The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:
A) Going-concern assumption.
B) Measurement (Cost) principle.
C) Business entity assumption.
D) Accounting equation.
E) Realization principle.

Question

Quizplus · Accepted Answer

The measurement (cost) principle requires assets and services to be recorded at their actual cost at the time of transaction. This means that the initial value of the asset, such as the purchase price, is recorded in the accounting records, rather than a higher or lower value based on fluctuations in the market or other factors. This principle also requires that ongoing expenses and costs associated with the asset, such as maintenance or depreciation, be recorded at their actual cost as well.

The Accounting Principle That Requires Accounting Information to Be Based