The Cost of Natural Resources Is Expensed in the Period

question 160

Multiple Choice

The cost of natural resources is expensed in the period:

• A) The resource is harvested and becomes ready for sale.
• B) The resource is acquired.
• C) The resource is sold.
• D) The resource is paid for.

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Definitions:

Income Statement Accounts

Accounts that are used to prepare the income statement, summarizing a company's revenues, expenses, and profits over a period.

Deferrals

Income or expenses that have been recorded but not yet earned or used, respectively, affecting future accounting periods.

Recognition

The process of recording an item or event in financial statements once it meets the criteria for financial reporting as defined by accounting standards.

Matching Principle

An accounting principle that requires companies to report expenses at the same time as the revenues they are related to are earned.