The firm recognizes an expense when the following condition(s) hold(s).
A)The consumption of the asset results from a transaction that leads to the recognition of revenue.
B)The consumption of the asset results from the passage of time.
C)The expenditures on advertising must be recognized as expense in the period of expenditure.
D)The expenditures on research must be recognized as expense in the period of expenditure.
E)all of the above

Question

Quizplus · Accepted Answer

All the conditions listed (A, B, C, D) are situations where a firm would recognize an expense. Expenses are recognized when they are incurred, which can be due to the consumption of an asset in generating revenue, the passage of time, or specific expenditures such as advertising and research during the period they are made.

The Firm Recognizes an Expense When the Following Condition(s) Hold(s)