During the period, the business acquired an equipment costing P 200,000 in cash. The business owner is questioning why you as his accountant did not include the P 200,000 equipment as one of the items of operating expense in the Income Statement which resulted in a higher income tax of the business.

How would you explain it to the owner

With regards to the question po, is there a possibility po ba na the accountant used the accrual basis wherein An expense is recognized on the income statement when it's incurred, regardless of when payment is made.