Question

Which of the following statements about accounting concepts and the characteristics of financial information is correct?

A Financial statements are required to give a true and fair view. These terms have clear definitions which are included in IAS 1, Presentation of Financial Statements.
B The historical cost concept means that only items capable of being measured in monetary terms can be recognised in financial statements.
C It may sometimes be necessary to exclude information that is relevant and reliable from financial statements because it is too difficult for some users to understand.
D A specific disclosure requirement of an IFRS Standard need not be satisfied if the information is immaterial.

Answer 1

The historical cost concept in accounting states that only items capable of being measured in monetary terms can be recognized in financial statements.

Step-by-step explanation:

The correct statement about accounting concepts and the characteristics of financial information is: B. The historical cost concept means that only items capable of being measured in monetary terms can be recognised in financial statements.

The historical cost concept is a fundamental principle in accounting that states that assets and liabilities should be recorded at their original purchase price. This concept requires that only items that can be objectively measured in monetary terms, such as cash, inventory, and equipment, can be recognized in financial statements.