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Questions and Answers
When should the Comfy Sweatpants Company record the supplies inventory as an asset?
When should the Comfy Sweatpants Company record the supplies inventory as an asset?
- After the liability is recorded
- After paying on account
- Once the goods have been received
- On the order date (correct)
What should the accounting clerk do regarding debiting accounts payable for the order?
What should the accounting clerk do regarding debiting accounts payable for the order?
- Debit accounts payable after paying on account
- Debit accounts payable on the order date (correct)
- Wait until supplies inventory are received to debit accounts payable
- Do not debit accounts payable
Why is it important for the Comfy Sweatpants Company to record supplies inventory as an asset on the order date?
Why is it important for the Comfy Sweatpants Company to record supplies inventory as an asset on the order date?
- To comply with accounting principles (correct)
- To delay recognizing liabilities
- To improve cash flow
- To match expenses with revenue
