Ask Question
BusinessBusiness
25 November, 17:37

Lisa Smith decided to start her CPA practice as a professional corporation, Smith CPA, PC. The corporation purchased an office building for $35,000. The real estate agent said the building was worth $50,000 in the current market. The corporation recorded the building as a $50,000 asset because Lisa believes that is the real value of the building. What concepts or principles of accounting is being violated?

+2
Answers (1)
  1. 25 November, 17:50
    0
    The answer is: Cost principle

    Explanation:

    The cost principle states that a business should record its assets, liabilities, and equity investments at their original purchase costs.

    In this case, Lisa paid $35,000 for the office building, so the recorded price of the asset should be $35,000 and not $50,000.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Lisa Smith decided to start her CPA practice as a professional corporation, Smith CPA, PC. The corporation purchased an office building for ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
A leveraged buyout refers to a (n) : a. action where the management of the firm and/or an external party buys all of the assets of a business financed largely with equity. b.
Answers (1)
Net income was $240,000 for the year. Throughout the year the company had outstanding 12,000 shares of 6%, $50 par value preferred stock and 75,000 shares of common stock. Basic earnings per share of common stock for the year were:
Answers (2)
If the expenses for producing an item are more than what you can sell it for you will experience a
Answers (2)
Love and happiness makes life better
Answers (1)
Which of the following changes would represent an austerity measure? Choose one or more: A. a decrease in the number of public workers, to reduce government expenses B. an increase in the number of public workers, to reduce government expenses C.
Answers (1)
New Questions in Business
Which of the following statements is true? a An increase in the money supply lowers the equilibrium rate of interest. b The supply of money curve is downward sloping. c The supply of money curve is a horizontal line.
Answers (1)
Why do you think the government is concerned with the definition of unemployment?
Answers (1)
Jodi just described how Best Buy's new program required a very different way of defining work. Because the hours are no longer imposed by the organization but are rather left up to the individual, Best Buy will need individuals with certain skills
Answers (1)
Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise:a.
Answers (1)
You spend $5 on materials to make a scarf. You think you have added $10 of value, so you set the price to $15. Nobody buys the scarf at that price, so you lower the price to $12, and someone buys it.
Answers (2)
Home » Business » Lisa Smith decided to start her CPA practice as a professional corporation, Smith CPA, PC. The corporation purchased an office building for $35,000. The real estate agent said the building was worth $50,000 in the current market.
Sign Up Forgot Password?