At the Time a Company Prepays a Cost

question 63

Multiple Choice

At the time a company prepays a cost

• A) it debits an asset account to show the service or benefit it will receive in the future.
• B) it debits an expense account to match the expense against revenues recognized.
• C) its credits a liability account to show the obligation to pay for the service in the future.
• D) it credits an asset account and debits an expense account.

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Definitions:

Emissions Tax

A tax on the production, sale, or use of goods that produce pollutants, intended to reduce the harm they cause to the environment.

Marginal Benefit

The added gain achieved by consuming an additional unit of a product or service.

Marginal Benefit

The enhanced pleasure or value a person gains upon consuming one more unit of a particular good or service.

Emissions Tax

A tax imposed on companies for the pollution they produce, intended to motivate them to reduce pollutants and adopt cleaner processes.