Prepayments Occur When

question 29

Multiple Choice

Prepayments occur when:

• A)Cash payment (or an obligation to pay cash)occurs before the expense recognition.
• B)Sales are delayed pending credit approval.
• C)Customers are unable to pay the full amount due when goods are delivered.
• D)Cash payment occurs after the expense is incurred and liability is recorded.

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Definitions:

Intraperiod Tax Allocation

This accounting technique involves allocating income tax expense or benefit among different components of comprehensive income within a single reporting period.

Continuing Operations

The segments or activities of a business that are expected to continue for the foreseeable future and are not classified as discontinued.

Disposal

The act of getting rid of an asset through sale, scrapping, or other methods, often resulting in a gain or loss in financial accounting.

Operating Expenses

Costs associated with the day-to-day functions of a business that are not directly tied to production.