New Enroll in RBI Grade B New Batch - Starts on May 21

    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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