Amber Gray tells you that the accountants where she works are real hair splitters. For example, they make a big issue over the difference between a cost and an expense. She says the two terms mean the same thing to her.

Required

a. Explain to Amber the difference between a cost and an expense from an accountant’s perspective.

b. Explain whether each of the following events produces an asset or an expense:

(1) Purchased a building for cash.

(2) Paid cash to purchase supplies.

(3) Used supplies on hand to produce revenue.

(4) Paid cash in advance for insurance.

(5) Recognized accrued salaries.