The Accounting Principle That Requires Accounting Information to Be Based

question 60

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 amount of cash or cash equivalent given in exchange is the:

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

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.

Period

A specific duration of time used for financial reporting and analysis, typically a fiscal quarter or year.

Cost of Goods Sold

Direct expenditures linked to the creation of goods sold by a business.

Calculate

To determine something mathematically, such as a sum, total, or other numeric value.