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Presented below are assumptions, principles, and constraints
Presented below are assumptions, principles, and constraints.
1. Economic entity assumption
2. Going concern assumption
3. Monetary unit assumption
4. Periodicity assumption
5. Measurement principle (historical cost)
6. Measurement principle (fair value)
7. Expense recognition principle
8. Full disclosure principle
9. Cost constraint
Identify by number the accounting assumption, principle, or constraint that describes the situation below. Do not use a number more than once.
- "Indicates. that market value changes subsequent to purchase are not recorded in the accounts."
Expert Solution
The correct answer to the given question is principle number 4.
Among the given principles, the measurement principle (historical cost) states that the transactions on the balance sheet are recorded at the historical cost or the original cost and these values are not revised over the tenure or economic life of the firm.
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