Some companies debit an expense account at the time an expense is prepaid instead of debiting an

Question:

Some companies debit an expense account at the time an expense is prepaid instead of debiting an asset account. The problem with this approach is that expenses will always be overstated, and assets understated. Do you agree or disagree? Why?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Accounting Principles Part 1

ISBN: 978-1118306789

6th Canadian edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow

See More Books

Question Posted: Mar 15, 2017 11:02 AM

See More Questions

The following characteristics may be related to either periodic inventory or perpetual inventory systems or both. a. Purchases of inventory are journalized to an asset account at the time of...
The following characteristics are related to either periodic inventory or perpetual inventory systems. A. Purchases of inventory are journalized to an asset account at the time of purchase. B....
On December 1, 2011, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by pur-chasing the assets and taking...
You and your spouse have earned salary and wages of $41,750. In addition you have municipal bond interest income of $600 and savings account and certificate of deposit interest income of $800. You...
Athletic World is a sporting goods store. The following data are for use in preparing its forecast of cash needs for June: a. Current assets (May 31): Cash . . . . . . . . . . . . . . . . . . . . . ....
In exercise 3, the following estimated regression equation based on 30 observations was presented. The values of SST and SSR are 1805 and 1760, respectively. a. Compute R2 . b. Compute . c. Comment...
In what way might the IASBs approach to standard setting be relevant for the FASB? LO4
On the Cities worksheet, click cell E13. Depending on the city, you will either take a shuttle to/from the airport or rent a car. Insert an IF function that compares to see if Yes or No is located in...
LBJ Enterprises is issuing new bonds for a capital budgeting project. The bonds will have 20.00 year maturities with a coupon rate of 7.46% APR with semi-annual coupon payments (assume a face value...
On the Motorola 68020 microprocessor, a cache access takes two clock cycles. Data access from main memory over the bus to the processor takes three clock cycles in the case of no wait state...
Jeremiah is preparing a balance sheet. He includes the amount shown in the adjusted trial balance for the owner's capital account on the balance sheet. Will the balance sheet balance? Why or why not?
If a company credits a revenue account when cash is received in advance of providing a service, then the adjusting entry is the same as if the company had debited a liability account when it received...
Find each product in Problems 3944 both algebraically and geometrically. (x + 2)(x + 4)
Units processed during September for material and conversion. Ask an instructor lock lock lock A 3 A copy Determine the cost per equivalent unit for material and conversion cost combined. copy...
12% of all college students volunteer their time. Is the percentage of college students who are volunteers different for students receiving financial aid? Of the 338 randomly selected students who...
Mervon Company has two operating departments: mixing and bottling. Mixing has 3 3 0 employees and Bottling has 2 2 0 employees. Indirect factory costs include administrative costs of $ 1 8 2 , 0 0 0...
XP Ltd. is a manufacturing company with high stock requirements. Management are currently considering their stockholding policy. The following information is available for one stock item, material...
Process Costing: weighted average method Required: make a cost of production report in good form. Cost of Production Report-Weighted Average First Dept- Gem Company applies 100% of materials at the...
Discuss critically, with your own supporting examples, the effects of technology on organisation structure.
Give the products of the following reaction, where T is tritium: dioldehydrase Ad- CH CH3C-COH CoIII) coenzyme B12
Maple Corporation, a private company, is authorized to issue an unlimited number of common shares and 500,000, $2.50 cumulative preferred shares. It began operations on January 1, 2014, and the...
Wetland Corporation, a private corporation, was organized on February 1, 2013. It is authorized to issue 100,000, $6 noncumulative preferred shares, and an unlimited number of common shares. The...
At the beginning of its first year of operations, Northwoods Limited has 5,000, $4 preferred shares and 50,000 common shares. Instructions Using the format shown below, allocate the total dividend...
September 23 for $1,050 each. On December 24 , it sold one of the diamonds that was purchased on July 9 . Using the specific identification method, its ending inventory (after the December 24 sale)...
Madsen Motors's bonds have 13 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 8%, and the yield to maturity is 10%. What is the...
Builder Products, Incorporated, uses the weighted - average method in its process costing system. It manufactures a caulking compound that goes through three processing stages prior to completion....

Some companies debit an expense account at the time an expense is prepaid instead of debiting an

Question:

Step by Step Answer:

Disagree While the statement is true prior to the ...View the full answer

Accounting Principles Part 1

Students also viewed these Cost Accounting questions