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Expenses represent the dollar amount of resources the entity used to earn revenues during the period. Expenses reported in one accounting period may actually be paid for in another accounting period. Some expenses require the payment of cash immediately while some require payment at a later date. Some may also require the use of another resource, such as an inventory item, which may have been paid for in a prior period. Maxidrive lists five types of expenses on its income statement, which are described in Exhibit 1.3. These expenses include income tax. expense, which, as a corporation, Maxidrive must pay on pretax income. The cost represents the amount of resources spent on tax revenue earned during the period. Expenses reported in the period, one may actually pay more in the period. Expenses paid in cash immediately, while others require payment at a later date. Some people may need to use other resources, such as inventory items which may have been paid in prior years. These costs include costs which the company would have to pay income tax on the income before taxes.
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