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[DOC File]GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
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BASIC ACCOUNTING REVIEW. I-Generally Accepted Accounting Principles (GAAP ): Unit of Measurement: Companies operating in a specific country shall use that country's local currency as a unit of measurement. Historical Cost: The principle of historical cost states that the value of merchandise or services obtained through business transactions should be recorded in terms of actual costs, not ...
advantages of historical cost accounting

[DOCX File]Chapter 2
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historical cost principle ... The use of historical cost in financial accounting is an example of a sacrifice of relevance for reliability. Historical cost is reliable information, but it may not be as relevant as current cost information. (2) When a private company provides its own estimate of the fair value of its’ stock. The value is relevant, but might not be a faithful representation of ...
cost accounting basics

[DOC File]ACCOUNTING THEORY - Pearson Ed
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Cost (Historical Cost) Principle. All assets owned by the business are recorded on the balance sheet at their cost price — the fair market value at the time the asset was purchased. All depreciation expenses are based on this original cost. If the asset changes very quickly in value, these changes are not shown in the financial statements of the business. For example, a business that bought ...
what is cost principle

[DOC File]Chapter 5
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This principle is too broad to lead to any kind of a choice among valuation systems, including historical cost. The postulate was also criticized because the time period of continuity is presumed to be long enough to conclude the firm’s present contractual arrangements. However, by the time these affairs are concluded, they will have been replaced by new arrangements. Hence, the implication ...
historical cost principle formula

[DOC File]Weebly
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Ex. 2-141—Historical cost principle. Cost as a basis of accounting for assets has been severely criticized. What defense can you build for cost as the basis for financial accounting? Solution 2-141. Cost is definite and verifiable and not a matter for conjecture or opinion. Once established, cost is fixed as long as the asset remains the ...
historical cost principle definition

[DOC File]Historical-cost or Fair-value Accounting: Analysis of the ...
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However, this accounting has the desirable feature of preserving certain aspects of amortized cost accounting for AFS securities—particularly the realization of gains and losses reported on the income statement via RECLASS—within a primarily fair value accounting framework. Even if fair values are well measured, amortized costs may be incrementally value relevant beyond fair values for ...
why is historical cost important

Accounting historical cost principle