Question

ste Styles Editing А у А - Аа Aa A A ΑΑ' 1 H - 21 Paragraph board 19 Font 1 Styles 67 2 4 5 I Question 6: (1.5 marks) Ramond Company has hired you to prepare financial statements for the year ending 12/31. On your first day of work, your assistant comes to you with several items that could be classified as expenses or could be classified as assets. Based on your knowledge of accounting so far, determine whether the following items should be recorded as an expense or an asset. +On 12/31, Ramond paid $14,000 to rent office space for the next twelve months, +On 10/1, Ramond paid $40,000 for insurance that covered the company's property for the last quarter of the year. +On 6/1, Ramond purchased $27,000 in supplies, all of which were used by 12/31. + On 12/31, Ramond purchased $5,000 worth of supplies for the coming month.​

Answer 1

The fact that Ramond paid $14,000 to rent office space for the next twelve months and paid $40,000 for insurance that covered the company's property are expenses.

What is an asset?

It should be noted that an asset simply means an item that has economic benefit to a company.

In this case, Ramond paid $14,000 to rent office space for the next twelve months and paid $40,000 for insurance that covered the company's property are expenses.

The assets are that Ramond purchased $27,000 in supplies, all of which were used by 12/31 and he also purchased $5,000 worth of supplies for the coming month. They're assets because they're beneficial to him as they can be used to provide further value.

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