Question

Which accounting principle advocates recording assets at their original transaction value and is based on the notion that the actual cost incurred to acquire an asset is the most reliable measure?

a) Consistency principle
b) Materiality principle
c) Historical cost principle
d) Conservatism principle

Answer 1

The Historical cost principle advocates for recording assets at their original transaction value, which is deemed the most reliable measure.

Step-by-step explanation:

The accounting principle that advocates recording assets at their original transaction value is the c) Historical cost principle. This principle is based on the idea that the cost actually incurred to acquire an asset is the most reliable measure. Thus, under the historical cost principle, assets are to be recorded on the balance sheet at their original cost when they were purchased, and not at their current market value. This principle provides a clear and consistent valuation method and is widely accepted in accounting practices.