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

Question

Quizplus · Accepted Answer

The cost of supplies used is considered an operating expense of a business as it is a necessary cost incurred in order to generate revenue. Accumulated Depreciation--Equipment is presented in the Assets section of a balance sheet as it is a contra-asset account that decreases the value of the Equipment asset account. The statement of owner's equity reports changes in the owner's equity of a business, but it does not typically include information about the cost of supplies used. Prepaid expenses are recorded as assets, not expenses, at the time of acquisition as they represent payments made in advance for goods or services that will be received at a later time.

Which of the Following Statements Is Correct