A company using the accrual basis of accounting pays $15,000 for a television advertising campaign. Commercials will run evenly in December, January, and February. How much expense will be reported on an income statement prepared for the month of December?

Question

Quizplus · Accepted Answer

Under the accrual basis of accounting, expenses are recognized when they are incurred. Since the commercials run evenly over three months, the expense for December would be $15,000 divided by 3, which is $5,000.

A Company Using the Accrual Basis of Accounting Pays $15,000