Question

Expenditure recognition: consumption method: JE's

1. Buying item
2. Use of item
3. On hand at YE

Answer 1

Expenditure recognition using the consumption method involves three journal entries: buying an item, using the item, and on hand at YE.

Step-by-step explanation:

Expenditure recognition using the consumption method involves three journal entries:

1. Buying an item: Debit the asset account and credit the accounts payable or cash account.
2. Using the item: Debit the expense account and credit the asset account.
3. On hand at YE (Year-End): Debit the inventory account and credit the expense account.

For example, if a business purchases a computer for $1000, the journal entry would be:

Debit Computer Equipment $1000

Credit Accounts Payable or Cash $1000