The cost principle in accounting states that assets should be recorded at their historical cost, not at their current market value. This means that once an asset is acquired, its value on the books remains at the purchase price, regardless of changes in market value. Thus, the correct example of the cost principle is a building purchased for $1 million last year, which is currently valued at $1.2 million, but the company still reports it at the purchase price of $1 million.