Concepts/Principles Related to TransactionsIn Malaysia, the ringgit is the unit of measurement for all transactions. No adjustment is made for changes in the purchasing power of the dollar. No attempt is made to reflect qualitative economic factors in the measurement of transactions.

The cost principle refers to the fact that transactions are recorded at their original (historical) cost to the entity as measured in dollars. For example, if a parcel of land were purchased by a firm for RM8,600 even though an appraisal showed the land to be worth RM10,000, the purchase transaction would be reflected in the accounting records and financial statements at its cost of RM8,600. If the land is still owned and being used 15 years later, even though its market value has increased to RM80,000, it continues to be reported in the balance sheet at its original cost of RM8,600.

Objectivity refers to accountants desire to have a given transaction recorded the same way in all situations. This objective is facilitated by using the dollar as the unit of measurement and by applying the cost principle