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Which of the following accounting concepts/principles is most significant in the development of a capitalization policy?

A. Matching of revenue and expense.
B. Original Cost.
C. Materiality.
D. Consistency.

1 Answer

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Final answer:

The most significant accounting concept in the development of a capitalization policy is B. Original Cost.

Step-by-step explanation:

The accounting concept/principle that is most significant in the development of a capitalization policy is Original Cost. Original cost refers to the actual amount spent to acquire an asset or incur an expense. In the context of a capitalization policy, it means that assets are recorded at their initial cost and not their current market value.

For example, if a company purchases a piece of equipment for $10,000, the original cost of the asset would be $10,000, regardless of its current market value. This concept ensures that capitalization policies are consistent and reflect the true cost of acquiring and maintaining assets.

The other options listed - Matching of revenue and expense, Materiality, and Consistency - are important accounting concepts, but they are not specifically related to the development of a capitalization policy.

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