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Why depreciation is considered as non-cash item and comes under the heading of operating expenses in Income Statement?
Depreciation is a way to match expenses for an assets that was purchased in a different accounting cycle. As the assets produces income, the expenses of the asset is then matched in following accounting cycles. It is considered an operating expense, since the matching assets is used for business operations.
Why are preliminary expenses considered as current assets?
because we get the benifit of such expenses in future
Is it true a withdrawal by the owner is recorded as a deduction from assets and an increase in expenses?
Yes, a withdrawal by the owner is typically recorded as a deduction from the owner's equity rather than directly from assets or as an expense. This transaction decreases the equity section of the balance sheet, reflecting that the owner has taken money out of the business. While it does reduce the overall assets, it does not increase expenses on the income statement, as withdrawals are not considered business expenses.
Are accrued expenses assets or liabilities?
Accrued expenses are those expenses the benefit of which has already taken by the business but the payment is not yet cleared that's why it is the liability of business.
When a business pays cash for salaries assets decrease and expenses?
INCREASE
Why depreciation is considered as non-cash item and comes under the heading of operating expenses in Income Statement?
Depreciation is a way to match expenses for an assets that was purchased in a different accounting cycle. As the assets produces income, the expenses of the asset is then matched in following accounting cycles. It is considered an operating expense, since the matching assets is used for business operations.
Why are preliminary expenses considered as current assets?
because we get the benifit of such expenses in future
Is it true a withdrawal by the owner is recorded as a deduction from assets and an increase in expenses?
Yes, a withdrawal by the owner is typically recorded as a deduction from the owner's equity rather than directly from assets or as an expense. This transaction decreases the equity section of the balance sheet, reflecting that the owner has taken money out of the business. While it does reduce the overall assets, it does not increase expenses on the income statement, as withdrawals are not considered business expenses.
Are accrued expenses assets or liabilities?
Accrued expenses are those expenses the benefit of which has already taken by the business but the payment is not yet cleared that's why it is the liability of business.
When a business pays cash for salaries assets decrease and expenses?
INCREASE
How do you dissolve your business?
To dissolve your business you can sell your assets and file a form with the Secretary of your state. You will also need to pay your business expenses.
1 Current assets do not include a. cash b. debtors c. outstanding expenses d. prepaid expenses?
The answer is (C ) Outstanding expenses, as these are liabities of business and not an asset.
Is preliminary expenses is a administrative expenses or selling expenses?
Preliminary expenses are neither administrative expenses nor selling expenses rather these are classified as other assets in balance sheet and amortized over period of life of business.
What Expenses recorded as fixed assets?
Those costs which used in business for more than one fiscal year treated as fixed assets.
Is a subscription a capital expense?
No, a subscription is considered an operating expense rather than a capital expense. Operating expenses are incurred in the day-to-day operations of a business, while capital expenses are investments in long-term assets like equipment or property.
How do you treate preliminary expenses?
Preliminary expenses are those expenses which incurred before start of actual operations so these are assets of business and shown in asset side of balance sheet as other assets and then amortized over period of time through income statement.
When do assets become expenses?
Assets become expenses when their economic benefits expire.
