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

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following is likely to be a business expense fully deductible in the current year?

Office supplies purchased and used during the year

Purchase of land for company expansion

Prepaid insurance for the next three years

Repayment of the principal on a business loan

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Verified step by step guidance

Understand the concept of business expenses: Business expenses are costs incurred in the ordinary course of business operations. To be fully deductible in the current year, the expense must be both ordinary (common and accepted in the industry) and necessary (helpful and appropriate for the business). Additionally, the expense must not be capitalized or spread over multiple years.

Analyze the options provided: Evaluate each option to determine whether it meets the criteria for being fully deductible in the current year. Consider whether the expense is ordinary, necessary, and used within the current year.

Option 1: Office supplies purchased and used during the year. These are typically considered ordinary and necessary expenses, and if they are used within the current year, they are fully deductible.

Option 2: Purchase of land for company expansion. Land is a capital asset, and its cost is not deductible in the current year. Instead, it is capitalized and may be depreciated or amortized over time, depending on the applicable accounting rules.

Option 3: Prepaid insurance for the next three years. Prepaid expenses are generally not fully deductible in the current year because they provide benefits over multiple years. The deduction is typically spread out over the coverage period. Option 4: Repayment of the principal on a business loan. Repayment of principal is not considered a deductible expense; only the interest portion of the loan payment may be deductible.