Question

Thirty years ago,Star Grocer Corporation purchased a building for its grocery store for $30,000.Based on inflation estimates,the amount of the building has been adjusted in the accounting records.The building is now reported at $75,000 in Star Grocer's financial statements.Which of the following concepts or principles of accounting is being violated?

A) going concern assumption
B) revenue realization concept
C) economic entity assumption
D) cost principle

Answer 1

D) cost principle

Step-by-step explanation:

Cost principle: The term "cost principle" is described as an "accounting principle" that tends to require equity, assets, and liabilities investments to be documented on financial records or documents at their "original price or cost" instead of the ongoing market price or cost. The term "cost principle" is also referred to as "historical cost principle".

In the question above, the principle related to accounting that is being violated is the "cost principle".