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      Question

      Which principle requires businesses to use the cost

      incurred to acquire an asset as its recorded value in the accounting books?
      A Consistency principle Correct Answer Incorrect Answer
      B Historical cost principle Correct Answer Incorrect Answer
      C Full disclosure principle Correct Answer Incorrect Answer
      D Revenue recognition principle Correct Answer Incorrect Answer

      Solution

      The Historical cost principle requires businesses to use the cost incurred to acquire an asset as its recorded value in the accounting books. This principle helps to ensure that the financial statements reflect the actual costs of assets, which is important for measuring profitability and making informed decisions.

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