Asked by Nabil Abdulkadir on May 14, 2024
Verified
At the time of acquisition of a debt investment
A) no journal entry is required.
B) the historical cost principle applies.
C) the Stock Investments account is debited when bonds are purchased.
D) the Investment account is credited for its cost plus brokerage fees.
Historical Cost Principle
An accounting principle that states that assets should be recorded and reported at their original purchase cost.
Stock Investments Account
An account on the balance sheet that represents the cost of buying and holding shares of another company.
Brokerage Fees
Charges paid to a broker for executing transactions or providing specialized services.
- Comprehend the impact of the historical cost principle in documenting investment transactions.
Verified Answer
Learning Objectives
- Comprehend the impact of the historical cost principle in documenting investment transactions.
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