Which one of the following is not a proper method of recognizing assets as expenses in a particular accounting period?
A)Customers' account balances in accounts receivable are assigned to expense in the period in which each customer pays.
B)Prepaid insurance is assigned to expense as the insurance expires.
C)A building is depreciated and its cost is assigned to the current and future accounting periods in which the building is expected to be used.
D)Merchandise inventory is assigned to cost of goods sold in the period the goods are sold.

Question

Quizplus · Accepted Answer

Customers' account balances in accounts receivable are not assigned to expense in the period in which each customer pays. A/R represents amounts owed to the company, and assigning it to expense when it is paid would result in overstating expenses and understating assets. Instead, revenue is recognized in the period in which the sale takes place, and A/R is reduced when the customer pays. The other methods listed (B, C, D) are proper methods of recognizing assets as expenses in a particular accounting period.

Which One of the Following Is Not a Proper Method