In the 14th century, plague ravaged Europe and Asia and was called the Black Death. Plague does not respond to penicillin, but other antibiotics are effective. Sanitary measures against fleas and rodents, quarantine and extreme caution in handling infectious materials help to suppress epidemics.
1. Expense recognition. Expenses are decreases in assets (e.g., rent expenses) or increases in liabilities (e.g., accrued utility expenses) that result from operating activities undertaken to generate revenue. Expenses are recognized in accordance with the matching principle. This principle mandates that the expense or cost of doing business is recorded in the same period as the revenue that has been generated as the result of incurring that expense or cost.
For example, inventory is an asset. Expenses are the cost of bringing in revenues. They were needed to bring in the revenues and profits that you reported this year. Expenses appear on the income statement. For example, just as inventory is an asset, âcost of goods soldâ is an expense. This is the cost of inventory that was sold during the year. The difference is really one of timing. An asset is expected to bring in a benefit sometime in the future. When the benefit comes in, then the asset becomes an expense. As it is sold, inventory is moved out of the inventory account on the balance sheet, and into the cost of goods sold account on the balance sheet.