Which one of the following is most likely violated if a firm increases the dollar amount reported for unsold inventory on the balance sheet to a cost it anticipates it will have to pay for future inventory items?
A)Consistency
B)Conservatism
C)Going concern
D)Economic entity

Question

Quizplus · Accepted Answer

This violates the principle of conservatism, which requires companies to record losses and liabilities as soon as they are anticipated, but to only record gains when realized. Increasing the dollar amount reported for unsold inventory to a cost that the firm anticipates it will have to pay for future inventory items is an overly optimistic assumption that violates this principle.

Which One of the Following Is Most Likely Violated If