also-known-as-the-historical-cost-principle-________-states-that-everything-the-company-owns-or-cont

Question

Also known as the historical cost principle, ________ states that everything the company owns or
controls (assets) must be recorded at their value at the date of acquisition.
A. revenue recognition principle
B. expense recognition (matching) principle
C. cost principle
D. full disclosure principle

Puneet Prajapati · Accepted Answer

Okay, so let&#x27;s understand the cost principle. So one example you. So it&#x27;s first record the exam two. We compete as but she is. You know, he Oh, daughter, 100 thousands and a beard. Incident. Del. Expenses off dollar 25 thousands. You&#x27;ll get the beacon. Just start, though. Name off. Go in. Tradition from me. A zone be for making ready to lose love from the current example. What people understand that How the computer But he be recording. It&#x27;s a sec which has been purchased by the computer. No. What for amount. The company will be recording the asset it will be. I was the prime focus off off this example and has been s our discussion. So lesson just turned this. The company has been cheese. No orator off house, $100,000. And the incident and expenses? No. What is the meaning? Off incidental expenses. Incident expenses are the expenses were charging in relation to the main expenses. Let&#x27;s suggest if you purchase left, if you purchase a laptop, then you will also have to pay animal maintenance. Judge AMC for Emily for maintaining the laptop in those. Also, if it has been his heart failed on an annual basis, so you have to pay for it. Along with that, you have to also, you have to make some other finger stick your toe. Taxes are somewhat local taxes so that you can buy the left from the store. So those are incidental expenses, which are required to be here who make the set ready to use. Otherwise, if you will not to protect us. If you will learn, be the incidental expenses you will not be able to touch either. Purchased. Forget about the negative news sore as a no, let&#x27;s make it. Let&#x27;s move further. So Company has incurred $25,000. Get the vehicle registered in the name of the most were flapping. If the vehicle will not restrict the name of company, then it will be. Then it will be considered as a vehicle that has been misplaced. Like God, that&#x27;s an illegal things that the vehicle is the largest in the name of that reveal a legal matter. So that is right. The complete has also Pete other charges for making the trip that you use and the amount off the charges. Oh, fight. So for that cost principle, So we have Deimos first off on this than this. And this So what they cost. Principal sees that every entity is pretty quiet. Record the sect which it owns at historical past over you can see actually cost No. Do this actual cost has not been explaining the portion and it is actually not required. Not quite extreme you want. But as a matter off instantly sold, for example, which we have just discussed like what will actually cost will comprise off for others. Laurie. First of all, you need some $100,000 as the Maine coast. Then the incidental expenses That is the registration of the vehicle then but that all other charges that will be required to be to make the A sect ready to use for the company that one&#x27;s will be included in the active post. So the actual cost at which the company will record the cassette in exponential strictness. One ticket. So the correct solution. So the correct solution What the correct choice for problem 11. This. See, that&#x27;s all for different solution.

Puneet Prajapati · Answer

solution. It&#x27;s his booze we have just named as oh extra. Now what happens when it sees the financial state routes? It goes through various type of travel natures, so that come to stay and nasty. It provides the accurate view off the interviews for nation position in comes off cash flu who was and much more the overall prevention position is given by and the allegedly What happens? Let&#x27;s understand this the legend. And did he only the guards Only the corset, which and did he has received loss. Entity has sublight good. So so mainly data do clothes to closes. And either off each either off is required to be that Julie card delivered in the Manchester. Intricate. Your first love. First you get this one. Let&#x27;s suppose X company receives among Mr 50 for you for so this up left up? No. What for? 11 left on making this fire. You know what will happen? X company will record this Stephen in different interest rate. Means it respected off providing the maintenance services throughout. Like let&#x27;s understand this. In other words, the X ray X company. Good God, more than 70. Even you. This service is have not being like so. Such a moan Vehbi reflected in different statements as an advance for providing the left up self maintenance services. Mr So So this challenge in clear this is strategy over. That&#x27;s interesting example. Number one, it&#x27;s example. Example. Number will be used to make understand the concept of this. It&#x27;s a Mr Next has supplied words late. Basically secular. Oh, no, no Close to see. I know what will happen when the when Mr X will record the outgoing off inventing a cycle. Oh, no, This realizes Mr Expertly guard $100 introspective, deceiving Oh, Mr C Mr Next would record the living off the 300 He&#x27;s four inches statements Still, Stig that even if the cycle has bean on, the goods or services have bean so light to the customer and the amount has not been deceived. Mr. X So, Mr X Value card $300 as the revenue deflation strictures. No, it&#x27;s a crazy shit concept. No, it&#x27;s in the days both of these news like so we can confirm 1st 1st post record in f s. We&#x27;re going to such beard in which such a venue is, uh, even though be be even collect into saving it. So this is this is a somebody off revenue, the good natured concept. They need a combination. And what will I understand? That even though the goods have been supplying, services have been supplied and that has not been received? So they introduced the constituted a new financial status and even if the amount has been deceived but the food&#x27;s awesome because have not been supplied then such amount also, I&#x27;m interested. So as as individual concept, Mr. X Company will record such a dollar 50 as a living room and he gets off second example, Mr X V card Sitch revenue off $300 indefinite district. It&#x27;s this is what the definition of divination principle states. Thank you.

Puneet Prajapati · Answer

Okay, so let&#x27;s understand the meaning. Awful disco. Full disclosure principle. One example is best for So let&#x27;s suppose we hear Entity ABC. You&#x27;d be seen company. Yes, to be it Financial steer groups for speedier fuzz jen 2020 31st December 2010. What, Like a genetic type of financial statements we can have very military distant former time going to use like was the cops in the city? Look, it&#x27;s a destroyed anything. Liberties in a six like capital, the capital of, say, 100 one. Good owners. Andi. Short term Deck 500 I wonder. Daughters. A long term debt. Fine. So it&#x27;s your daughters? Yes, 1000. Davis does it 1000 homes. So what? The full disclosure principal says, Let&#x27;s see if the entity has prepared this furniture Strict terms for the meteor. But for this period? No, what? The full disclosure principal sees that if there is anything on any matter which is, it&#x27;s quiet, be witches or which has potential to affect any of these items. Any of these items in the financials to Chris, then that matters should be deported in the notes for the financial statements like working what type of makers we can have. It&#x27;s also a mistake like we can have matters like this. Capital also includes. But if you didn&#x27;t, she retention in jeopardy so that there is a law that requires the provincial capital redemption rules, and it also needs to be segregated in tow, known to elective and cumulative evidence. So these are the matters which, if present in the preparation of financial statement than these types of matters, must be deported in the notes to finish. Let&#x27;s suppose shocked on deck what type of matters we can have like we can have. The short term deck is goingto be restructured because the entity is, although under these having sufficient cash payout both off the loans invaluable. But still the entities, like little restructure the short term debt. And what is the meaning of the structure? Just more defined? The shady love repayment off? No. So, like three structure we can have. So these type off matters for cash on. So we have matter that maybe the catch is not very fight at the end of Bellingen by the auditor so that these type of matter can be the pulpit. The notes also Seamus for *** you can have so detectives by for your disclosure. So it&#x27;s its meaning. Actually, it&#x27;s literal meaning. Give all the answers. It&#x27;s a like you have to disclose everything which has been presented in the from interesting report every matter that has prevention effect the matters Wasn&#x27;t dude indeed financial papers. So for this for this problem, the the current explanation of this the literal meaning is this however you can also we can also use different examples who understand the scene. This example will be more than enough to understand this so so direct choices for for problem dee for problem, then this. So that&#x27;s all for the current solution. Thank you.

Puneet Prajapati · Answer

Okay, so let&#x27;s understand. Be expense recognition are we can see matching principle in today. So we start for the next open. So c o why Company yes supplied 10 4 different customers in different cities off. I don&#x27;t know. One Sunday by phone. Why come to me? As in good expenses, supply such whores off daughter six big play in total means for all of the 10 force in tradition, a delivery boy incurred fording expenses provided making that gives you so what we&#x27;re going to understand from this example These are like me who has supplied and forms defense it ese indifferent who different customers in different cities off I&#x27;m drink daughter, but for so we have a golden seal off you&#x27;re not going to hear this Make it down here. So first of all, let&#x27;s understand the example And then we will move the calculations. It&#x27;s It&#x27;s a very simple calculation on, so the vital me will have be likely to have but have any off 100 funky dollars like 10 multiplied by So also like my company has incurred expenses to supply such forms off. $600 like these are just delivery expenses which have green card. Otherwise, the delivery lobby, also in addition, worked. A delivery boy has done that he has incurred FUDING expenses while making a delivery to the customers. No licked. Let&#x27;s understand the suspect. Ready? Clear. See, I did that. Delivery boy has been authorized to incur such such expenses while making the delivery. Or the delivery boy just incurred these expenses on there on his own so that what happens, Let&#x27;s understand. So what the matching principal actually say&#x27;s the expense of recognition. Principal sees that in the period off financial statements, let&#x27;s see by company has made only this much saying, We think this figure before this speedy it the bike of being has soared and phones 100. But for so this seems to be 100 daughters, no less expenses. Expenses will be who fell off $600 affording expenses. However, they depend on circumstances whether it will be met with such men and such expenses that these expenses are traced by the company and not sewing. In the present case. We as you unauthorized So what? The matching wits open seas that all the expenses in court, who only thieves live in new will be recorded in this speedy it will be recorded in this period. Viol plicating defended state I repeated with very clear notation so that it will be easy during this time for you. So let&#x27;s suppose then the sales have bean. Let&#x27;s 1000 1000 notice expenses off 600. So the vie complete cannot say like this that out of 600 we will be recording 500 in the current period and 100 next. Immediate. This position is is not possible as pretty expensive combination principle. The principle say&#x27;s work. Every expense has been incurred on the revenue will be recorded in this same period, in which the revenue has bean. That&#x27;s for the cause. Principal sees that you cannot do the segregation off expenses on the basis of person opinions. You will have to a deputy expense the ammunition principle on most precisely the matching. So so, the correct choice for problem be for problem sport Problem place is be. However, we can also take example tools forward like if lets you support 200 expenses. Expenses. Off to wonder has also been card in the same period, but it has, but such expenses are not incurred. Toe on disturbing you. That revenue will likely to be recorded in the next period. They&#x27;re living. They live in revenue. Means they even knew which concerns the in getting off this expenses This so that living revenue. It&#x27;s like you, Toby he recorded in next period. Then such case expenses of wondered will be recorded in next year&#x27;s Not in the current, because it is very likely they have in you which, which which would be oh, it&#x27;s what we are getting. These expenses will be recorded in next year&#x27;s soon. Therefore, expenses off 200 expenses off, $200 will be recorded in next to us. But imagine principle, like you will have sales and expenses off the off the scene seeing video and seem relevancy. Otherwise, morphine happen. They will be a reduction on inflation or profit very drastically in the same period by not reporting the expenses with the relevant. So therefore, the Magic principal sees Julie, you will be required to record the expenses wherever the relevant revenue. This the car that figure. So therefore we have the solution. The current choice for the problem with this. That&#x27;s all for the solution. Thank you

Puneet Prajapati · Answer

stand the solution. Okay. In the given case, it has been given that we have three values, actually. Okay, We have value the cost of building. Okay, He quits too. 1 50,000 daughters, then the priest market value. What is the meaning off a pleased. Actually, it is the assessed market value, like we can Sylvia purchased building in the current exam. In the current question, we have the are having a building that has been produced 20 years ago. Now, if we will see the value property hasn&#x27;t today. Yeah, so it will be office. It&#x27;s really very, very obvious that the market value of a single appreciate over the period of 20 years. So after that, I precision it has come to who? $35,000. All right. The MPD has reported value a balance sheet level. What&#x27;s that? To 50,000 dollars to 50 $5000. Okay. No work principle has been violated here. We will understand it. Okay, do we will understand these three don&#x27;ts. First upon then we will go through, but actual solution. So at Bellingen level, what happens? First of all, what the course principal says boss spinster posies. That and Didi are chasing. The sect has to record such a set. Abdi at the cost, including expertise boast as well s any incident expenses guard who may The asset that you use would be worth the cost. Principal sees it says that the entry team will record the sect, the cost and what will be included in the cost. What will be included in the cost? It will include deeper chase cost of a set. Okay, Deeper chase cost of physic on any type of incidental expenses incurred. So make the set very shoes. Okay, first off, let&#x27;s understand to weaken exam, but suppose you have but cheese, uh, you have purchased only a computer. Okay, so after you, please use the computer what you have to do, You have to make the machine into an assembled form so that you can use that you can use it. So the assembly off the computer, like you know, the fitting off the process it into the CBO, attaching all the cables into the correct position. It is known as assembly of assembling. Okay, So the assembling cost of the computer came around to $50. Okay, so close to $50 will also be capitalized in the financial state claims in the the cost of the computer because without $50 it will be very, very impossible for a person to assemble the computer on its own and make the computer readyto juice. So that is, why complete what will be actual capitalized but just cost less incident? No cost P C equals to purchase cost. I see coastal incidental costs an incidental costs, which will only be encouraged to make the set ready to use and moved in any other guns. Okay, no, let&#x27;s move to our actual example. And Balanchine level what the balance sheet rule says. Or we can say the financial reporting standards. He&#x27;s the sect. It will be reported in financial statements. Yes, necked off Deposition. What full cost? First of all good cost. Principal Borgia industry. Even if George the market value of a second appreciated it does not matter. You have to record your essay. It&#x27;s cost, but you have incurred okay after that. What? Bella juices as next of that position deposition is just in a month, which, which is judged every year to reflect that the that the actual value of a set appreciates on. But in our business and really we can see And the depositions. And it is not just dinner at Bellingen level. Your asset has to be stated that full cost the cost at which the SEC has been actually purchased. Okay, So as of now, they will come to our main problem. The cost of building Was this market value off building? Was this okay? The reporter value Valentin. Level it. So this is wrong. What has been for what type of principle has been violated? Baskets. The entity has to record it. It&#x27;s a set at the cost on active balance sheet level. If their deposition has been judged, then the entity has to record the Met Billy after they&#x27;re upping the deposition from it from this cost. Okay, so what supportive of it? Derek Joyce. Foot problem 23 Exit Gausman&#x27;s. So the correct choice for Problem 23 is D. That&#x27;s all for the solution. However, you can sympathize that what we have started with Oh, with our better given three values. After that, we have come to know the board. The ostensible says the champion entity has to the card. It&#x27;s a set at the cost, OK? And after that board, the balance sheets is that said will be reported in financial statement as nectar. Deposition for their positions is via and do you off the set on animal raises. Okay, so my father followed by that we have come to know the Democratic choice for probably 23 years. That&#x27;s all for the solution. Thank you.

Puneet Prajapati · Answer

school next this day. The magic concept. What is the matter? Concert series. What does the maximum concept sees? The concept states that they have in your and expenses be according on the basis off generating. You getting that. That the you meant we dig received or no. Okay, So what is the matching? What is the magic concept? That&#x27;s understandable. Wakes up? Yeah. To suppose there is a company. There is a physical. Okay, so it is a big cards recorded. The seats or 2019 Julia scenes has recorded at 1000 notice. Okay, Now, expenses, all expenses, little all expenses, electrical generating sales off 1000 motors will be reported here. Indeed, in this financial year, even if this expenses will be paid in subsequent years, Okay, these expenses will be recorded if that they&#x27;re living or if they are incurred to generate this states. Okay, so let&#x27;s suppose $500 on expenses, but in garden 2000, 90,000 when we got in Judea. So what will be the net profit next offered relief. So is that clear that vehicle record sees as well as matching expenses, okay. In the current financial year, even if those expenses as well as that seems okay. The amount for expenses, the amount for sales in BPH received in few genius. Okay, so maybe not. So we will ignore the payment. We meant aspect that that that they are being paid in a violent area or in subsequent years. If the goods and services will be delivered in current financial year, then still be the garden. So if we have incurred expensive during financially, who is your great sales in current currency, then expenses will be recorded in better financial, even if these expenses would be paid in next. Okay, so thanks for the magic on subsidies. However, the solution which matches our current choice so that his choice Okay, it actually says that the cost off sales or we can see expenses are connected. They will be reported in the financial yet. Okay, even if the payment will be made in subsequent years. Okay, So, Joycean cancer, everybody, you can write down the definition on matching concept foreword by that example and declaring So that&#x27;s all

Problem

Which of the following principles matches expense…

Problem 11 Medium Difficulty

Also known as the historical cost principle, ________ states that everything the company owns or
controls (assets) must be recorded at their value at the date of acquisition.
A. revenue recognition principle
B. expense recognition (matching) principle
C. cost principle
D. full disclosure principle

Answer

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Mitchell Franklin, Patty Graybeal, Dixon Cooper

Principles of Accounting Volume 1: Financial Accounting

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Principles of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon CooperPrinciples of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon Cooper

Principles of Accounting Volume 1: Financial Accounting