The Historical Cost Principle Requires That When Assets Are Acquired

question 117

Multiple Choice

The historical cost principle requires that when assets are acquired they are recorded at

• A)book value.
• B)the amount paid to acquire them.
• C)appraised value.
• D)list price.

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Definitions:

FASB

The Financial Accounting Standards Board, which is responsible for establishing and improving financial accounting and reporting standards in the United States.

IASB

The International Accounting Standards Board, an independent body that establishes and approves accounting standards.

Allowance For Doubtful Accounts

An accounting concept referring to a reserve for accounts receivable that may not be collectible.

Aging

A method used in accounting to categorize accounts receivables based on the length of time an invoice has been outstanding to manage and track debts.