The cost principle states that an asset should be recognized on the balance sheet at

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The cost principle states that assets should be recognized on the balance sheet at their historical cost. This means that assets should be recorded based on the actual amount paid to acquire them, rather than their current market value or any other subjective valuation measure. This principle helps ensure that financial statements provide an accurate reflection of the company's economic resources and are not inflated or deflated based on market fluctuations or subjective valuation methods.

The Cost Principle States That an Asset Should Be Recognized