Which of the following statements is correct? Options: • Prepayments of supplies initially recorded as asset will be adjusted at the end of the period as debit to unused supplies the portion that remains unused • Prepayments of interest expense under asset method should be recorded as debit to unearned interest • If unpaid expenses incurred during the accounting period are not accrued, the income for the period will be overstated
Which of the following statements is correct? Options: • Prepayments of supplies initially recorded as asset will be adjusted at the end of the period as debit to unused supplies the portion that remains unused • Prepayments of interest expense under asset method should be recorded as debit to unearned interest • If unpaid expenses incurred during the accounting period are not accrued, the income for the period will be overstated
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Which of the following statements is correct?
Options:
• Prepayments of supplies initially recorded as asset will be adjusted at the end of the period as debit to unused supplies the portion that remains unused
• Prepayments of interest expense under asset method should be recorded as debit to unearned interest
• If unpaid expenses incurred during the accounting period are not accrued, the income for the period will be overstated
• There is no provision for depreciation in cash basis accounting because there is no actual cash involved
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