During April,the Grass is Greener Company buys and pays for a six-month supply of fertilizer in order to receive a bulk discount.The cost of fertilizer is recorded:
A)immediately as an expense.
B)as a liability,which will later be reduced as the fertilizer used.
C)partially as an expense and partially as a liability.
D)as an asset,which will later be reduced as the fertilizer is used.

Question

Quizplus · Accepted Answer

Since the fertilizer is being purchased for future use, it should be recorded as an asset on the balance sheet. As the fertilizer is used over time, the asset will be reduced and the corresponding expense will be recorded. Therefore, option D is the best choice.

During April,the Grass Is Greener Company Buys and Pays for a Six-Month