Thirty years ago, Citywide Grocery 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 Citywide's financial statements. Which of the following concepts or principles of accounting is being violated?

Question

Quizplus · Accepted Answer

The cost principle states that assets should be recorded at their historical cost, not their current value based on inflation estimates. Citywide Grocery Corporation violates this principle by reporting the building at its adjusted value rather than its original cost.

Thirty Years Ago, Citywide Grocery Corporation Purchased a Building for Its