Accounting Help please!!!?

Question

1. Economic entity assumption

2. Going concern assumption

3. Monetary unit assumption

4. Time period assumption

5. Full disclosure principle

6. Revenue recognition principle

7. Matching principle

8. Cost principle

9 Materiality

10. Conservatism

Presented below are some business transactions that occurred during 2006 for Vicki Prowitz Company.

In each of the situations below, identify the assumption, principle, or constraint that has been violated, if any. Give the correct journal entry if indicated.

1. Merchandise inventory with a cost of $208,000 is reported at its market value of $260,000. The following entry was made.

Merchandise Inventory DB $41,920

Gain CR $41,920

What is the violation here? Why?

Answer 1

It's a violation of the cost principle (8)

The trend in most accounting standards is a move to more accurate reflection of the fair or market value, although the historical cost principle remains in use.