A utility bill is received on December 27 and will be paid next year. When should the company record utility expense?

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20-09-2021
Mathematics

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A utility bill is received on December 27 and will be paid next year. When should the company record utility expense?

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andromache andromache · Answer 1 · 2021-09-22T15:51:33+02:00

The company should record utility expenses in the expense recognition principle.

The following information is related to the expense recognition principle is:

Under this principle, the expenses should be recorded when the revenue should be recorded it means in the same period.
As in the given case, the expense should be related to the last year. But it should be paid in the coming year.
So, here this principle assured that it should be properly charged to the particular year.

Therefore, we can conclude that the company should record utility expenses in the expense recognition principle.

Learn more about the utility here: brainly.com/question/14149928

Since the expense relates to the previous year, the utility bill relates to that year. Since it is being paid the next year, Expense recognition principle will ensure that it is properly charged to that particular year.