Which of the Following Should Be Included in the Cost

question 153

Multiple Choice

Which of the following should be included in the cost of land?

• A)Costs of grading and clearing the land
• B)Costs of removing an unwanted building
• C)Cost of fencing
• D)Both A and B

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Definitions:

Expenses

Costs incurred in the process of generating revenues, representing the consumption of resources such as raw materials, labor, and overhead.

Accrual Basis

An accounting method that recognizes revenue when earned and expenses when incurred, regardless of cash flow.

Recognizes Expenses

The accounting process of formally recording or acknowledging that an expense has occurred, typically impacting the profit and loss statement.

Fiscal Year

A twelve-month period used for accounting purposes and preparing financial statements, which may not align with the calendar year.