When Should an Expenditure Be Recorded as an Asset Rather

question 60

Multiple Choice

When should an expenditure be recorded as an asset rather than an expense?

• A) Never.
• B) Always.
• C) If the amount is material.
• D) When future benefit exists.

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Definitions:

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to finance government spending, including bonds, bills, and notes.

Open Market

A freely competitive market in which any buyer or seller may participate and where transactions are not restrictively regulated by government.

Interest Rates

The percentage of a loan that is charged to the borrower as interest, usually presented as an annual rate of the remaining loan balance.

Excess Reserves

Banks' reserves that are greater than the minimum regulatory requirement, not needed to fulfill lending demands.