Answer
a.Costs are categorized as expenses when they are not directly linked to revenue-generating activities.
b.Costs cannot be allocated to assets since assets are utilized to generate revenue for a particular duration.
c.Costs are categorized as assets when it is clear that they contribute to an entity’s revenue.
d.Costs can be spread over multiple periods when it is clear that they generate revenues throughout those multiple periods.
e.Costs are categorized as losses when they result in losses.
Work Step by Step
a.Costs are categorized as expenses when they are not directly linked to revenue-generating activities.
b.Costs cannot be allocated to assets since assets are utilized to generate revenue for a particular duration.
c.Costs are categorized as assets when it is clear that they contribute to an entity’s revenue.
d.Costs can be spread over multiple periods when it is clear that they generate revenues throughout those multiple periods.
e.Costs are categorized as losses when they result in losses.
