A business purchases and fits new tyres for its delivery van on credit. The date the tyres are fitted and the date of the invoice is 25 June 2016. The invoice is paid in full on 15 July 2016. Under the accrual system of accounting, what is the effect of this transaction? Select one: a. An expense and a cash payment (asset decrease) is recorded on 15th July 2016 b. An expense and a liability is recorded on 15th July 2016 c. An expense and a liability is recorded on 25th June 2016 d. An expense and a cash payment (asset decrease) is recorded on 25th June 2016
A business purchases and fits new tyres for its delivery van on credit. The date the tyres are fitted and the date of the invoice is 25 June 2016. The invoice is paid in full on 15 July 2016. Under the accrual system of accounting, what is the effect of this transaction? Select one: a. An expense and a cash payment (asset decrease) is recorded on 15th July 2016 b. An expense and a liability is recorded on 15th July 2016 c. An expense and a liability is recorded on 25th June 2016 d. An expense and a cash payment (asset decrease) is recorded on 25th June 2016
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A business purchases and fits new tyres for its delivery van on credit. The date the tyres are fitted and the date of the invoice is 25 June 2016. The invoice is paid in full on 15 July 2016. Under the accrual system of accounting, what is the effect of this transaction?
Select one:
a. An expense and a cash payment (asset decrease) is recorded on 15th July 2016
b. An expense and a liability is recorded on 15th July 2016
c. An expense and a liability is recorded on 25th June 2016
d. An expense and a cash payment (asset decrease) is recorded on 25th June 2016
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