It Is Acceptable to Record Prepayment of Expenses as Debits

question 196

True/False

It is acceptable to record prepayment of expenses as debits to expense accounts.

---

Definitions:

Cost of Goods Sold

Expenses directly connected with making the products a company offers for sale.

FOB Destination

A shipping term indicating that the seller is responsible for the cost and risk of transport until the goods reach the buyer's location.

Buyer's Place

The agreed location where the buyer takes ownership of goods purchased, significant in determining shipping costs and liability.

Perpetual Inventory System

An inventory management approach where inventory levels are updated in real time with each sale or purchase.