what is cost concept
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General meaning :
The term 'cost' is most widely used as the 'money cost' of production which relates to the money expenditure of a firm on:Money costs therefore relate to money outlays by a firm or factors of a production which enable the firm to produce and sell a product
Meaning in accountancy:
The cost principle is one of the basic underlying guidelines in accounting. It is also known as the historical cost principle. The cost principlerequires that assets be recorded at the cash amount (or its equivalent) at the time that an asset is acquired.
Hope it helps .
The term 'cost' is most widely used as the 'money cost' of production which relates to the money expenditure of a firm on:Money costs therefore relate to money outlays by a firm or factors of a production which enable the firm to produce and sell a product
Meaning in accountancy:
The cost principle is one of the basic underlying guidelines in accounting. It is also known as the historical cost principle. The cost principlerequires that assets be recorded at the cash amount (or its equivalent) at the time that an asset is acquired.
Hope it helps .
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Answer:
(1)Cost Concept or Historical Cost Concept
:- According to this concept, an asset is ordinarily recorded in the books of accounts at the price at which it was acquired. This cost becomes the basis of all subsequent accounting for the asset. Since the acquisition cost relates to the past, it is referred to as historical cost. This cost is the basis of valuation of the assets in the financial statements. For example, if a business entity purchases a building for 720,00,000, it would be recorded in the books at this figure. Subsequent increase or decrease in the market value of the building would not be recorded in the books of accounts. If two years later the market value of the building shoots up to 760,00,000, the increased value will not be ordinarily recorded in the hooks of accounts.
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