Which of the following statements is correct?
A) The cost of supplies used is reported on the statement of owner's equity.
B) The cost of supplies used represents an operating expense of the business.
C) Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance sheet.
D) At the time of their acquisition,prepaid expenses are recorded in expense accounts.

Question

Quizplus · Accepted Answer

The cost of supplies used represents an operating expense of the business. This expense is typically reported on the income statement as part of the cost of goods sold or as a separate line item under operating expenses. Option A is incorrect because the cost of supplies used is not reported on the statement of owner's equity. Option C is incorrect because Accumulated Depreciation--Equipment is presented in the Assets section of a balance sheet. Option D is incorrect because prepaid expenses are initially recorded in asset accounts, not expense accounts.

Which of the Following Statements Is Correct