Why do accounting principles emphasize the use of historical cost as a basis for measuring assets ?

Jennifer, as we know that recording in the books is maintained on historical cost principle. Now transactions are recorded on historical cost because of the objectivity and verifiability concept. The objectivity concept states that all the transactions that are recorded in the books must be verifiable. Thus, assets are recorded on historical cost so as to verify the amount from the source documents and vouchers prepared for it.

  • 11
What are you looking for?