The Cost Principle States That an Asset Should Be Recognised

question 26

Multiple Choice

The cost principle states that an asset should be recognised on the balance sheet at:

• A) the market value of the asset.
• B) at the market value less the accumulated depreciation on the asset.
• C) at its historical cost.
• D) at its historical cost less the accumulated depreciation on the asset.

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Definitions:

Producer Surplus

The disparity between the minimum amount producers are prepared to take for a product or service and the higher amount they end up getting.

Blockade

An act of sealing off a place to prevent goods or people from entering or leaving, typically implemented as a form of economic or military pressure.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive.

Autarky

A financial strategy or condition where a nation is independent and refrains from participating in global commerce.