A prepaid expense Оoccurs when an expense is recorded in the current period but not paid until a future period.Оoccurs when a company receives cash from customers prior to providing goods and services to thosecustomers.Оoccurs when an asset is acquired in the current period but not expensed until a future period.ОAll of these answer choices are incorrect.

An item that a business purchases in advance with the hope that it would be utilised or consumed…

Answered: О occurs when an expense is recorded in…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 5DQ

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Expenses recognized in the wrong accounting period: What does it mean when a company may delay recording an expense by recording as an asset? Please explain.
Which of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.
Which of the following is not an example of an asset?   Group of answer choices Supplies. Accounts receivable. Prepaid Insurance. Deferred revenues.
Which of the following is false? A. A liability is created when cash is received prior to delivery of the goods or services. 20. B. Revenue is recognized at the time of delivery of the goods or services if cash is received. C. Revenue is not recognized at the time of delivery of goods and services if cash is received after delivery of the goods and services. D. Collecting cash after delivery of a good or service does not create revenue on the income statement at the date of collection.
Pronghorn Group has negotiated the purchase of a new piece of automatic equipment at a price of HK$6,160 plus trade-in, fo.b. factory. Pronghorn paid HK$6,160 cash and traded in used equipment. The used equipment had originally cost HK$54,560; it had a book value of HK$36,960 and a secondhand fair value of HK$40,320, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of HK$960. (a) Your answer is correct. ress Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance. (Credit account titles are automatically Indented when amount is entered. Do not indent manually. Include in your journal entry separate account entries for both the new and old equipment. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Account Titles and Explanation Equipment Accumulated Depreciation Equipment Equipment Cashi…
How many of the following statements regarding the Revenue Recognition and Matching Principles are true? According to the Revenue Recognition Principle, a company should not record the revenue from a transaction until it is actually received in cash. If payment is received at the time a service is provided there is no difference between how cash and accrual accounting record the transaction. The Matching Principle requires that expenses be matched to the period in which they help to produce revenue. Group of answer choices A. None B. One C. Two D. Three
An asset created by a payment for economic benefits that does not expire until some later time is Multiple Choice recorded as a debit to a prepaid expense account recorded as a debit to an unearned revenue account recorded as a credit to an unearned revenue account recorded as a credit to a prepaid expense account not recorded in the accounting records
Which of the following assets would not be included as a quick asset? a.Merchandise inventory b.Cash c.Temporary investments d.Accounts receivable
no need to explain In the preparation of a schedule of safe payments, cash withheld for future liquidation expenses, and unrecorded liabilities that may be discovered is treated as: a. Operating expenses b. Other Expense c. Loss on realization d. Possible loss
A change in the expected service life of an asset arising because additional information has been obtained is: a. an accounting change that should be reported by restating the financial statements of all prior periods represented b. an accounting change that should be reported in the period of change and future periods if the change affects both c. a correction of an error d. not an accounting change
Which of the following situations does not base an accounting measure on a present value? Prepaid insurance , leases, pensions or sinking funds
Using practical example discuss why current asset is not seen not part of the income statement b) Discuss with practical example how the absence double entry principle will significantly affect the preparation of trial balance c) Discuss using practical example to show the importance of a trial balance to the preparation of income statement Discuss with figures how you will detect errors if the trial balance does not agrees

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