Entity A, an established business, purchases two identical staplers costing P300 each. Entity A charges the cost of one of the staplers as an expense but recognizes the cost of the... Entity A, an established business, purchases two identical staplers costing P300 each. Entity A charges the cost of one of the staplers as an expense but recognizes the cost of the other stapler as an asset. Which of the following concepts is violated?
Understand the Problem
The question is asking which accounting concept is being violated when one stapler is charged as an expense and the other is recognized as an asset despite being identical. This relates to accounting principles and the treatment of expenses versus capital assets.
Answer
Consistency concept
The final answer is the consistency concept.
Answer for screen readers
The final answer is the consistency concept.
More Information
The consistency concept mandates that businesses apply the same accounting treatment to similar events unless there is a sound reason to change that treatment.
Tips
When analyzing similar transactions, ensure that the accounting treatment does not differ unless clearly justified and disclosed.
Sources
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