Which of the Following Is True of the Cost Principle

question 4

Multiple Choice

Which of the following is true of the cost principle?

• A) It highlights the proposition that value is not the focus of accounting and is not represented in financial statements.
• B) Using this principle results in the subjectivity of value assessments.
• C) Under this, costs are measured subjectively on actual basis.
• D) It results in reflecting the current values of assets, liabilities, equity, revenues, and expenses shown on the financial statements.

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Definitions:

Consumer Price Index

A measure of the average change in prices over time that consumers pay for a basket of goods and services.

Salary Equivalent

The equivalent annual salary amount for non-standard work arrangements when comparing to a full-time salary rate.

Price Index

A measure showing how prices change over time for a fixed basket of products, used to monitor inflation or deflation.

Current Year Income

The total amount of money earned by an individual or entity within the current calendar year.