Accounting for IGCSE & O level - Advanced Principles (Section 1 - No. 20)
Which of the following is an application of the historic cost principle?
Recording assets and expenses at their actual price paid.
The business owner’s personal financial affairs and business finances should be recorded separately.
Dividing the lifetime of a business into successive accounting periods.
The business is expected to continue operating for the foreseeable future.
Explication
The historic cost principle dictates that assets and expenses should be recorded at their actual price paid.