The Accounting Principle That Requires Accounting Information to Be Based

question 249

Multiple Choice

The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:

• A) Going-concern assumption.
• B) Measurement (Cost) principle.
• C) Business entity assumption.
• D) Accounting equation.
• E) Realization principle.

---

Definitions:

Congested Highway

A highway or roadway that experiences traffic congestion due to a high volume of vehicles, often leading to slower speeds and longer travel times.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often arising from production or consumption of goods and services.

Socially Optimal Quantity

The level of production or consumption that maximizes social welfare, considering all costs and benefits to society.

Equilibrium Quantity

The quantity of goods or services bought and sold at the equilibrium price, where demand equals supply.