The Great Escape Company has just purchased a supply of 80 000 litres of diesel fuel for its buses. The diesel fuel is an expense to the company in the accounting period in which the fuel is:

Question

Quizplus · Accepted Answer

The diesel fuel is an expense to the company in the accounting period in which it is consumed in the running of the buses. Until the fuel is used, it is considered inventory or a prepaid expense. Once it is used, it becomes an expense and is recorded on the income statement. Therefore, the answer is option D.

The Great Escape Company Has Just Purchased a Supply of 80