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Revenue expenditure: If it carries over into the next period, revenue expenditure would appear as a current asset in the statement of Financial Position?
What does this sentence mean? Can anyone explain with a example? Thank u.Unfortunately most of the book for sale are written in a bureaucratic language and many time caught the meaning of a sentence it is very hard, in particular from non mother tongue english speaker. That cause a big confusion in the process of learning.
Anyway in few word it meant INVENTORY.“If a business buys ten widgets for $200 ($20 each) and sells eight of them during an accounting period, it will have two widgets left at the end of the period. The full $200 is revenue expenditure but only (8 × $20) = $160 is a cost of goods sold during the period. The remaining $40 (cost of two units) will be included in the statement of financial position in the inventory of goods held – as a current asset valued at $40”
It also refers to prepayments.
If on 1/10/2019 a business pays $12,000 for insurance for 1/10/2019 – 31/9/2020, 9 months of that is a prepayment as at 31/12/2019. The $9,000 prepayment will appear as a current asset as at 31/12/2019 and only $3,000 will be included in expenses to 31/12/2019.
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