An Expense Incurred in 2013 Is Not Paid Until 2014

question 24

Multiple Choice

An expense incurred in 2013 is not paid until 2014. Using the accrual basis of accounting, the expense should appear on:

• A) the 2014 income statement
• B) the 2013 income statement
• C) neither the 2013 nor 2014 income statement
• D) both the 2013 and 2014 income statements

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Definitions:

Consignee's Ending Inventory

The value of goods that are still on consignment at the end of an accounting period, not yet sold by the consignee.

Specific Identification

An inventory costing method where the cost of each specific item in inventory is identified and assigned to the sold units.

Individually Identifiable

Characteristics of an asset or an entity that can be distinctly identified, isolated, and valued separately from other assets or entities.

Cost of Goods Available

Cost of goods available refers to the total cost of inventory that a company has to sell at the beginning of an accounting period, including purchases made during the period.