Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following costs is NOT recorded as part of the cost of a building under generally accepted accounting principles (GAAP)?

Legal fees related to the purchase

Cost of installing elevators

Architectural fees for building design

Annual property insurance after occupancy

Previous problemNext problem

Verified step by step guidance

Understand the concept: Under GAAP, the cost of a building includes all expenditures directly related to acquiring the building and preparing it for its intended use. These costs are capitalized, meaning they are recorded as part of the asset's value on the balance sheet.

Identify the costs provided in the question: Legal fees related to the purchase, cost of installing elevators, architectural fees for building design, and annual property insurance after occupancy.

Analyze each cost: Legal fees, elevator installation, and architectural fees are all directly related to acquiring or preparing the building for use, so they are capitalized as part of the building's cost.

Consider the nature of annual property insurance: This is a recurring expense incurred after the building is ready for use. It is not directly related to the acquisition or preparation of the building, so it is treated as a period expense and recorded on the income statement, not capitalized.

Conclude: The cost that is NOT recorded as part of the cost of the building under GAAP is the annual property insurance after occupancy, as it is an ongoing expense rather than a capitalizable cost.