Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 9Q: Explain the difference between prime costs and conversion costs.
Related questions
Question
Kindly solve only A
Expert Solution
Step 1
A historical cost is the original cost of an asset that is the value of the asset when it is acquired by the company. As per this, the asset is recorded on balance sheet on its historical cost only.
US GAAP states that all the assets should be reported only on historical cost on balance sheet. The value of asset remains constant over the period when company follows the historical cost concept and it also helps the company to follow the consistency concept of the accounting.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College