What is the cost principle?

Answer by  tmhayes (24)

The cost principle is an accounting term. It is the concept that goods and services that are purchased should be recorded at their historical cost and not their current market value. An example would be when assets are written off, the asset is recorded as a historical cost less any accumulated depreciation.

Answer by  Magnum (8)

Accountants need to record what the actual cost of a product or service is in its current value. Not what it would cost in a future valuation. This concept is mostly used for short and long term assets.

Answer by  jason87 (44)

The cost principle refers to a method of accounting where firms use the costs of different things (supplies, buildings, wages, etc.) they use to conduct business to report the financial transactions of the firm.