If a Resource Has Been Consumed but an Invoice Has

question 50

Multiple Choice

If a resource has been consumed but an invoice has not been received at the end of the accounting period, then

• A) an expense should be recorded when the invoice is received.
• B) an expense should be recorded when the cash is paid out.
• C) an adjusting entry should be made recognizing the expense.
• D) it is optional whether to record the expense before the invoice is received.

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Definitions:

Discounted Price

A reduced price below the original mark-up, often to encourage purchase or clear inventory.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including repayment terms and interest rates.

Average Inventory

The mean value of inventory held by a company over a specific period of time, calculated to assess inventory levels and management efficacy.

Carrying Cost

Expenses associated with holding inventory, including storage, insurance, and depreciation.