What do you mean by "cost concept of accounting? Write its example.
1 Answer
According to the cost concept, fixed assets are recorded in the book of accounts at the cost price. The price paid to acquire the assets is termed as cost price. The market value of assets is not considered during preparation of the books of accounts. The assets are shown in balance sheet at their book values. Book value means cost price minus depreciation.
For example: If a plot of land was purchased for RS. 500,000 five years ago that figure will appear in the books without considering the market value of the land.
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