Asked by Cassandra Lorenzo on Apr 30, 2024
Verified
The use of the historical cost principle is justified because the resulting information has the primary quality ingredients of
A) neutrality and predictive value
B) representational faithfulness and neutrality
C) timeliness and neutrality
D) verifiability and feedback value
Historical Cost Principle
An accounting principle requiring all financial items to be recorded based upon original cost, without adjusting for inflation or market value.
Primary Quality
Fundamental or inherent characteristics that determine the value or usefulness of something.
- Acknowledge the established assumptions and customs within accounting.
Verified Answer
LR
LoAnnie RodriguezMay 02, 2024
Final Answer :
B
Explanation :
The historical cost principle results in financial information that is both representational faithful (as it accurately reflects the original cost of the asset) and neutral (as it is not influenced by the subjective opinions of management or market fluctuations).
Learning Objectives
- Acknowledge the established assumptions and customs within accounting.
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