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.

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Definitions:

Machine-Hours

The total number of hours that machinery is operating, used in cost accounting to assign machine-related costs to items.

Round Calculations

The process of adjusting numerical values to a specified degree of precision, often used in financial and statistical analysis to simplify figures.

Machine-Hours

A measure of production time, quantifying the hours a machine is operated in the manufacturing of a good.

Activity Rate

The activity rate is a cost accounting term that refers to the rate at which indirect costs are allocated to products or services based on specific activities.