Which of the following is an example of an expenditure that could be recognized as either an immediate asset or an expense?
A)Purchase of a new plant (factory)
B)Purchase of a 12 month insurance policy
C)Payment of an account payable
D)Payment of wages

Question

Quizplus · Accepted Answer

The purchase of a 12-month insurance policy could be recognized as an immediate asset if the policy covers future periods beyond the current reporting period. Alternatively, it could be recognized as an expense if the policy only covers the current reporting period. None of the other options have the same flexibility in recognition.

Which of the Following Is an Example of an Expenditure