EXPENSES AND COST OF SALES PART 2

cash PAID = Expenses INCURRED

• True

• False

cash PAID + PAYABLE = expense INCURRED

• True

• False

cash PAID - PREPAID = expense INCURRED

• True

• False

PREPAID expense =

• current ASSET

• current LIABILITY

expense PAYABLE =

• current ASSET

• current LIABILITY

I paid $4000 for rental expense. Monthly rental expense is $5000.

Rental expense incurred for March =

• $4000

• $5000

Monthly rental expense is $5000. I paid $6000.

• Rental expense PAYABLE $1000

• PREPAID rental expense $1000

ANNUAL rental expense is $12000. I paid $14000.

rental expense INCURRED for the YEAR =

• $12000

• $14000

• $2000

I paid $800. Annual insurance expense is $1000.

Insurance expense INCURRED for the YEAR =

• $800

• $1000

• $200

NOT a current asset.

• PREPAID expense

• Expense PAYABLE

• income RECEIVABLE