An expenditure that benefits year one but is paid for in year two should not be recorded until year two.

Question

Quizplus · Accepted Answer

This statement is incorrect. According to the accrual accounting principle, expenses should be recognized in the period in which they are incurred, regardless of when the payment is made. This means that an expenditure that benefits year one but is paid for in year two should be recorded as an expense in year one.

An Expenditure That Benefits Year One but Is Paid for in Year