Question

Cougar Corporation bought inventory on account on August 23rd. Cougar paid its supplier for the inventory on August 28th. Cougar sold the inventory on account on September 2nd and received payment from its customer on September 12th. On what date did Cougar record the inventory as an expense?A. August
`28^(th)`

B. September
`2^(nd)`
C. August
`23^(rd)`
D. September
`12^(th)`

Answer 1

"B"

Step-by-step explanation:

Expenses are recognized under the accrual accounting principle.

Before expenses can be recognized under accrual method , it must be matched to a particular revenue.This means that expenses are recognized in the period that the expense was able to generate a revenue. In other words , it in recorded in the period in which it was sold and not the period it was bought.

This is done to improve the quality , accuracy of financial statement to give a true representation of an organization.