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Question
Financial statements are prepared on the basis of _________ cost.
Financial statements are prepared on the basis of _________ cost.
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Solution
The correct option is B historical
As per “Generally
Accepted Accounting Principles (GAAP)” one of the important rule is to
record all transactions on the basis of historical cost, which is verifiable
from the documents such as cash receipt for the money paid. This brings in
objectivity in the process of recording and makes the accounting statements
more acceptable to various users.
As per “Generally Accepted Accounting Principles (GAAP)” one of the important rule is to record all transactions on the basis of historical cost, which is verifiable from the documents such as cash receipt for the money paid. This brings in objectivity in the process of recording and makes the accounting statements more acceptable to various users.
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