A Cost Ought to Be Recognised as an Asset When

question 61

Multiple Choice

A cost ought to be recognised as an asset when:

• A) it is probable that it will provide future economic benefits.
• B) it may provide future economic benefits.
• C) it involves drawings by the owner.
• D) the cash has been paid.

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Definitions:

Prepaid Expenses

Costs paid in advance for goods or services to be used or received in the future, classified as current assets on a balance sheet.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net income or loss.