What Is The Cost Principle?
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Answer:
The cost principle is one of the basic underlying guidelines in accounting. It is also known as the historical cost principle.
Explanation:
The cost principle requires that assets be recorded at the cash amount (or the equivalent) at the time that an asset is acquired. Further, the amount recorded will not be increased for inflation or improvements in market value. (An exception is the change in market value of a short-term investment in the capital stock of a corporation whose shares of stock are actively traded on a major stock exchange.)
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