Leading Questions TAK

Chapter 10 EXPENSES

1. What is expense?
2. What are the differences among cost, expense and loss?
3. When should expense be recognized?
4. Explain the connection between accruals and deferrals on the one hand and the process of matching
on the other. Give an example
5. Name 3 basic methods of matching and give an example of each
6. Why the current practice of allocation is criticized?
7. What are the arguments to defend allocation?
8. Determine whether an asset or expense should be charged for the following costs and state your
reasons:
a. Cost of removing two small machine to make way for a larger new machine
b. Cost of repairing a floor damaged when a new machine was dropped while being unloaded
c. Cost of a new calculator, $48
d. Cost of major repairs to equipment (the need for repair was discovered immediately after
acquisition and there is no warranty on the equipment)
9. What are issues for standard setters pertaining to expense recognition and measurement?
10. What are issues for auditors surrounding expenses?