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What does the cost principle mean for a company's income statement?

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تم إضافة السؤال من قبل Rana Alnajjar , Web developer , Lebcards
تاريخ النشر: 2016/12/01
Nazmul Islam CMA
من قبل Nazmul Islam CMA , Manager , Robi Axiatal Ltd.

In the cost principle the valuation of assets or inventory is based on cost i.e. depreciation is calculated on the cost value of the asset.

manseer muhammed ali
من قبل manseer muhammed ali , Accountant General , Royal Lighting L.L.C & Royal Furnishing LLC

If a company has buildings, equipment and inventory, the cost principle will mean that the amount of depreciation expense and the cost of goods sold expense will be based on the costs when the assets were acquired. If these assets have increased in value, the depreciation and cost of goods sold reported on the income statement will be less than the value of the economic capacity being used up. As a result, the reported net income will be greater than the economic reality.

Soliman Abd  ALmalak Gendy
من قبل Soliman Abd ALmalak Gendy , مدير ادارة مراقبة حسابات , الجهاز المركزى للمحاسبات

The cost principle requires that only the verifiable, historical costs recorded at the time of transportation will appear as expenses on the income statement.

Mutwakil   Gabril
من قبل Mutwakil Gabril , Student , Abu Dhabi University

If a company has a buildings, equipment or inventory amount of depreciation expense and the cost of gold sold that it depends on the asset that they have.

Wilfredo Quito
من قبل Wilfredo Quito , Accounting Manager , DDC LAND INC.

Thank you for your kindness invitation.

I agree with all previous answers.

Regards

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