BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The concept according to which assets are recorded in the books of accounts at the price at which they are acquired or purchased is called cost concept.

Detailed explanation-2: -The cost concept requires that all assets are recorded in the book of accounts at their purchase price, which includes cost of acquisition, transportation, installation and making the asset ready to use.

Detailed explanation-3: -The Historical Cost Principle requires the carrying value of assets on the balance sheet to be equal to the value on the date of acquisition – i.e. the original price paid.

Detailed explanation-4: -The historical cost principle states that a company or business must account for and record all assets at the original cost or purchase price on their balance sheet. No adjustments are made to reflect fluctuations in the market or changes resulting from inflationary fluctuations.