The cost principle requires assets to be initially recorded at: Group of answer choices market value. the amount paid for them. selling price. liquidation value.
Question
The cost principle requires assets to be initially recorded at: Group of answer choices
market value.
the amount paid for them.
selling price.
liquidation value.
Solution
The cost principle requires assets to be initially recorded at:
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Not market value. While market value can be used in some accounting models, the cost principle specifically requires assets to be recorded at their original cost.
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The amount paid for them. This is the correct answer. The cost principle requires that assets be recorded at their original cost, which is the amount paid for them at the time of purchase.
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Not selling price. The selling price is the amount for which an asset could be sold, not its original cost.
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Not liquidation value. The liquidation value is the estimated amount that an asset would fetch in a forced or hurried sale, not its original cost.
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