The Cost Principle Requires That Companies Record Assets at Their

question 157

Multiple Choice

The cost principle requires that companies record assets at their

• A)appraisal value.
• B)cost.
• C)market price.
• D)list price.

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Definitions:

Accounts Receivable Period

The Accounts Receivable Period is the average number of days it takes for a business to receive payments from its customers for goods or services sold on credit.

Accounts Receivable

Receivables from customers for goods or services provided but not yet compensated.

Effective Annual Interest Rate

The interest rate on a loan or financial product restated from the nominal rate as an annual rate that reflects compounding over a given period.

Cash Cycle

The period of time it takes for a company to convert its investments in inventory and resources into cash flows from sales.