What is the Cost Concept?
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WHAT IS THE COST CONCEPT?
The cost concept expresses that assets and liabilities are initially recorded in the final accounts at the “at cost price”. In other terms, it is the actual amount paid when the asset or liability was originally acquired by a business. This approach of recording the assets and liabilities is regarded as the most objective way of valuing these items in the accounts. This is because those who are valuing or recording the assets or liabilities in the accounts are not dependent on trying to estimate what the value of the asset or liability might be if it were to be sold.
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