A company using accrual accounting pays $12,000 for a television advertising campaign in November, 2012. Commercials will run evenly in November, December, and January. How much expense will be reported on an income statement prepared for the year ended December 31, 2012?

Question

Quizplus · Accepted Answer

Under accrual accounting, expenses are recognized when incurred. Since the commercials run evenly over three months, $4,000 is expensed in November and $4,000 in December, totaling $8,000 for 2012.

A Company Using Accrual Accounting Pays $12,000 for a Television