Question

The basic principle involved with expense recognition is: Multiple Choice All costs that are used to generate revenue are recorded in the period the revenue is recognized. All transactions are recorded at the exchange price. The business is separate from its owners. The business will continue to operate indefinitely unless there is evidence to the contrary.A company orders office supplies in June. Those supplies are received and paid for in July. The supplies are used in August. In which month should the company record supplies expense

Answer 1

Answer:

All costs that are used to generate revenue are recorded in the period the revenue is recognized

Supplies expense is recorded in August

Explanation:

Expenses are the cost that a company incurs in the process of generating revenue from an asset. As such when a business is paying cost like wages, rent, and office materials it is generating revenue from sales and services provided.

The expense recognition principle requires that a business records expenses when revenue associated with them are recognised.

An office that orders office supply and uses them in August will only recognise supply expense when there is use of the office supply.

So supply expense will be recognised in August