For Each of the Following, State Whether You Agree or Disagree

question 83

Essay

For each of the following, state whether you agree or disagree with the accounting treatment. What concepts support your view?
a)A company records all revenue when earned, whether it has been collected or not.
b)Payment of a three-year insurance policy is charged to insurance expense and not adjusted.
c)Because the December telephone bill did not arrive until January, no telephone expense was recorded for December.
d)Management of Classic Cars requires the accountants to prepare monthly financial statements.

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Definitions:

Expensive Goods

Products or services that have a high price relative to their intrinsic value or compared to other alternatives in the market.

Utility Function

A mathematical representation of how different combinations of goods or services can provide different levels of happiness or satisfaction to a consumer.

Indifference Curves

A graph that represents combinations of goods among which a consumer is indifferent, showing different levels of utility.

L-shaped

Often used to describe demand or recovery curves that have a rapid decline followed by a period of stagnation.