The Alternative Method of Accounting for Prepayments

question 85

Multiple Choice

The alternative method of accounting for prepayments

• A)Initially records all prepaid expenses with debits to expense accounts.
• B)Initially records all prepaid expenses with credits to expense accounts.
• C)Requires an adjusting entry because expenses are understated.
• D)Requires an adjusting entry if the prepaid is consumed during the period.
• E)Requires an adjusting entry because net income is understated.

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Definitions:

Least-expensive Benefits Package

A benefits plan that offers the minimum required level of benefits at the lowest possible cost to the employer.

HR Department

The division within an organization responsible for overseeing employment-related matters, including recruitment, training, benefits, and compliance with labor laws.

Sick Leave Programs

Employer-provided benefits that allow employees to take time off work with pay when they are ill, to ensure health recovery without the loss of income.