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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Which of the following is a limitation of the direct write-off method of accounting for uncollectible? The direct write-off method overstates assets on the balance sheet. The direct write-off method does not match expenses against revenue very well. The direct write-off method does not set up an allowance for uncollectible. All of the above
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.
The modified accrual basis ______. Multiple select question. What solution is it below? (A) records receivables (B) is merely a "light" version of the accrual version is not equivalent to the cash basis (C) accrues expenditures when payable (D) does not recognize long-term assets and liabilities
As prepaid assets are used to generate revenue, an adjustment is necessary to reduce the previously recorded prepaid asset and reduce the related expense. True or False?
Explain
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.
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 is correct about non-trade receivables being classified as current assets?a. non-trade receivables are classified as current assets if these are collectible within one year or the company's normal operating cycle. whichever is shorter.b. non-trade receivables are classified as current assets if these are collectible within the company's normal operating cyclec. non-trade receivables are classified as current assets if these are collectible within one yeard. non-trade receivables are classified as current assets if these are collectible within one year or the company's normal operating cycle, whichever is longer.e. non-trade receivables are never classified as current assets.
Which of the following statements is not correct? Multiple Choice The cost less the salvage value equals the depreciable base of a long-term asset. Uncollectible Accounts Expense is a contra asset account. If a firm records prepaid expense items in an expense account when they pay for them, their adjustment at the end of the period to record the unexpired portion would include a debit to an asset account and a credit to an expense account. Each adjustment for an accrued expense includes a credit to a liability account.
Note: Option A is incorrect. Need correct option

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