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Chapter 12: 22Q (page 637)

Indicate the proper accounting for the following items.

  1. Organization costs.
  2. Advertising costs.
  3. Operating losses.

Short Answer

Expert verified

All charged to the current operation.

Step by step solution

01

Meaning of Operating loss

The operational loss is the money lost before non-operating elements are subtracted from the income statement.This loss solely includes continuing operations, which happens when operating expenditures exceed income from activities.

02

Indicating the proper accounting treatment for the items

  1. Organizational cost -recorded when incurred.
  2. Advertising cost-advertising is regarded as an expense item listed on the income statement.
  3. Operating losses- The loss is shown on an income statement before including non-operational items is known as an operating loss.

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