Under generally accepted accounting principles, the assets owned by a business are reported in the balance...
Under generally accepted accounting principles, the assets owned by a business are reported in the balance sheet at their historical cost. Identify and briefly explain two accounting principles other than the cost principle that supports the valuation of assets at cost in the balance sheet.
Homework Answers
Aao per GAAP, assets owned by business are reported in the balance sheet at their historical cost . The other two accounting pricniples that also support valuation of asset at cost in balance sheet are :-
1. Realisation concept = Any change in the value of an asset is to be recorded only when the business realizes it. When an asset is recorded at it's historical cost if $100000 and it's current cost is $150000 such change is not counted unless there is certainty that such change will materialize .
2 . Conservatism = it states that accountant should not anticipate any income. When there are many alternative values of an asset, accountant should choose the value which leads to least vaiue and generally historical cost leads to such low value.
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Under generally accepted accounting principles, the assets owned
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