3-4 identify the accounting concept or principle that gives the most direction o

Question

3-4 identify the accounting concept or principle that gives the most direction on how to Aveling accounting Concepts and count for each of the following situations: A utility bill is received on December 30 and will be paid next year. When should the principles company record utility expense? (oby, 2) Salary expense of $35,000 is accrued at the end of the period to measure income properly. March has been a particularly slow month, and the business will have a net loss for the first quarter of the year. Management is considering not following its customary practice of reporting quarterly eamings to the public. A construction company is building a highway system, and construction may take 3 rears. When should the company record the revenue it eams? 154 Chapter 3 Accrual Accounting and the Financial Statements e. A physician performs a surgical operation and bills the patients insurance company may take 3 months to collect from the insurance companyShould the physician reo revenue now or wait until cash is collected?

Explanation / Answer

a. The expense recognition principle. The company should record the utility expense in December.

b. The expense recognition principle.

c. Time-period concept.

d. The revenue principle. The company should record revenue as per percentage of completion method or completed contract method.

e. The revenue principle. The revenue should be booked now as the service is provided and there is certainity that the payment shall be collected.

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