Question

An dishwasher purchased for $5,000 two years ago has been appraised at $6,000. The dishwasher is not written up to $6,000 because of which generally accepted accounting principle?

1) objective evidence principle
2) consistency principle
3) matching principle
4) cost principle

Answer 1

The dishwasher is not written up to $6,000 because of the cost principle in accounting, which states that assets should be recorded at their historical cost.

Step-by-step explanation:

The generally accepted accounting principle that prevents the dishwasher from being written up to $6,000 is the cost principle. The cost principle states that assets should be recorded at their historical cost, rather than their market value.

In this case, the dishwasher was purchased for $5,000 two years ago, and even though it has been appraised at $6,000, it is not written up to that value. The dishwasher is not written up to $6,000 because of the cost principle in accounting, which states that assets should be recorded at their historical cost.