Read the following two situations regarding Webster Co, which uses the accrual method of accounting...
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Accounting
Read the following two situations regarding Webster Co, which uses the accrual method of accounting
I. Webster Co. purchases computers for $20,000 in 2019. The computers have a useful life of 5 years and have no salvage (residual) value. Webster would record the entire $20,000 as an expense on its income statement in 2019 for the purchase of these computers.
II. Webster Co. receives its December 2019 electric bill on December 31, 2019 for $500. Webster pays its $500 electric bill on January 15, 2020. Webster would record the $500 as an expense in January 2020.
In which of the two situations above is Webster correctly applying the Matching (Expense Recognition) Principle by recording expenses in the proper time period?
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