30 years ago, Star Grocer Corporation had purchased a building for its grocery store by paying $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 the financial statements of Star Grocer. Which of the following concepts or principles of accounting is being violated?

Question

Quizplus · Accepted Answer

The monetary unit assumption is being violated because the building is being reported at its current market value of $75,000, rather than its historical cost of $30,000. This violates the principle that assets should be recorded at their historical cost and not at their current market value.

30 Years Ago, Star Grocer Corporation Had Purchased a Building