Expense recognition. Assume that Hewlett Packard (HP) uses the accrual basis of

Question

Expense recognition. Assume that Hewlett Packard (HP) uses the accrual basis of accounting and recognizes revenue at the time it sells goods or renders services. Indicate the amount of expense recognized during. March (if any) from each of the following transactions or events. HP pays an insurance premium of S18.000 on March I for I year's coverage beginning on that dale. On April 3, HP receives a utilities hill totaling $4,600 for services during March. HP purchases on account supplies costing $7,000 during March. It makes payment for $5,000 of these purchases on account in March and pays the remainder in April. On March 1, supplies were on hand that cost $3,000. On March 31, supplies th3t cost $3,500 were still on hand. Same as part c. except that S2.000 of supplies were on hand on March I. In January. HP paid property taxes of $48,000 on an office building for the year. On March 29. HP paid an advance of $250 on the April salary to an employee. I

Explanation / Answer

Answer:

Transaction e is not recognised as expense because it is incurred in jan not in March.

Transaction c,d is not an expense.

Accural Basis Transaction Revenue expense a. 18000 b. 4600 f 250

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