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Unformatted text preview: inside knowledge, they were able to make financial decisions based on information no one else had. The accounting principle related to this situation is the Cost Principle, which states assets must be recorded at their actual (or historical) cost. Based on this principle, the actions of the management were perfectly legal. They bought the stock prior to the price going up. However, the Reliability Principle states accounting information must be accurate and verifiable. The managers purchased the stock based on information not yet recorded in the books....
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This note was uploaded on 10/18/2011 for the course LITERATURE LIT 101 taught by Professor Stault during the Spring '11 term at Albany State University.
- Spring '11