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Unformatted text preview: According to the AICPA’ Articles of Professional Conduct, several standards should be set and followed by a successful business utilizing a system of internal controls to prevent fraudulent and collusive activities by its employees. (1) Historical Cost Principle Under this principle, which is a fundamental principle in accounting, all goods and services purchased are recorded at cost, where costs are measured on a cash or equivalent basis. If the consideration given for an asset or service is cash, cost is measured at the entire cash outlay made to secure the asset or the service. Otherwise, cost is measured at the cash equivalent value of the consideration given or the cash equivalent value of the thing received whichever is more clearly evident. (2) Objectivity Principle This principle requires that entries in the accounting records and data reported on financial statements be based on objectively determined evidence. This principle answers the question why assets and services are based on objectively determined evidence....
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- Spring '11