Accrued liabilities are recorded only when payment is made.Group of answer choicesFalseTrue

Answer

The statement "Accrued liabilities are recorded only when payment is made" is False.

Explanation

Accrued liabilities are obligations that a company has incurred but has not yet paid. This means that these liabilities are recognized in the financial statements before any cash payment is made. For example, if a company receives services in December but does not pay for them until January, the company would still record an accrued liability at the end of December to reflect the expense in the correct accounting period. This principle is in line with the accrual basis of accounting, which states that expenses and revenues should be recognized when they are incurred, regardless of when cash transactions occur.

In essence, the purpose of recording accrued liabilities is to ensure that the financial statements present an accurate picture of a company’s financial position by matching expenses with the revenues they generate within the correct reporting period. So, accrual accounting allows businesses to recognize their liabilities and expenses as they occur, even if the cash has not yet been disbursed.