Accounting for Expenses and Assets in a Dental Practice Quiz

An expense represents the cost of resources consumed to generate revenue.

The Income Statement reports revenues and expenses, showing the net income or loss.

Operating expenses are incurred in the regular operations of a business and include administrative costs.

Recording expenses allows for the determination of net income by subtracting expenses from revenue.

The Income Statement summarizes revenues, expenses, and net income over a specific period.

Dental equipment is a long-term asset with a useful life beyond one accounting period.

The matching principle dictates that expenses should be recognized in the period when related revenue is recognized.

The historical cost principle mandates recording assets at their original purchase price.

Non-current assets are those expected to provide economic benefit beyond one year, such as dental equipment.

Depreciation allocates the cost of an asset over its useful life, reducing its value on the balance sheet.

Cash increases (debit) while Revenue increases (credit) in double-entry bookkeeping.

Inventory increases (debit) while Accounts Payable increases (credit) when dental supplies are purchased on credit.

The going concern concept assumes that a business will continue its operations for the foreseeable future.

The purchase of dental chairs with cash increases assets (dental chairs) and decreases liabilities (cash).

Cash decreases (credit) while Rent Expense increases (debit) when rent is paid.