Describe What Criteria Is Applied When Choosing a Policy Instrument

question 111

Essay

Describe what criteria is applied when choosing a policy instrument.

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Definitions:

Prepaid Expense

An expense that is paid for in advance and recorded as an asset until it is actually incurred.

Double-Entry Bookkeeping

An accounting system in which the recording of each transaction affects two or more accounts and the total of the debits is equal to the total of the credits.

Debiting

The process of recording an entry on the left side of the accounting ledger, which increases asset or expense accounts and decreases liability, equity, or revenue accounts.

Crediting

The process of making an entry on the right side of an account in double-entry bookkeeping, indicating an increase in liabilities, equity, or revenue, or a decrease in an asset or expense.