Expensing a building in the year of purchase represents an abuse of which of the following accounting conventions?
A) Relevance
B) Cost-benefit
C) Conservatism
D) Timeliness

Question

Quizplus · Accepted Answer

Conservatism requires that losses and expenses should be recognized as soon as they are probable, but gains and revenues should only be recognized when they are certain. Expensing a building in the year of purchase goes against the concept of conservatism because it does not reflect the economic reality of the situation, where the building will likely provide benefits for several years in the future.

Expensing a Building in the Year of Purchase Represents an Abuse