Non-monetary items like employee skills and morale are excluded from financial records

Steps:

• Identify the issue: Financial statements only include items that can be quantified in money.
• Recall accounting principles: Principles dictate what gets recorded based on measurability.
• Match to choices: Skills and morale lack reliable monetary value, so they're omitted.
• Confirm principle: This follows the rule limiting records to monetary transactions.

Why B is correct:

• Monetary measurement principle states that only events expressible in monetary terms are recorded, excluding qualitative factors like skills or morale.

Why the others are wrong:

• A: Historical cost records assets at original purchase price, not about excluding non-financial items.
• C: Materiality concerns whether info significantly affects decisions, but skills/morale are omitted due to non-monetary nature, not insignificance.
• D: Realisation requires revenue recognition when earned, unrelated to employee attributes.

Final answer: B