The amount of accrued but unpaid expenses at the end of the period is both an expense and*a. an assetb. a revenuec. a liabilityd. a deferral
Question
The amount of accrued but unpaid expenses at the end of the period is both an expense and
- a. an asset
- b. a revenue
- c. a liability
- d. a deferral
Solution
Step 1: Break Down the Problem
To understand the nature of accrued but unpaid expenses, we need to consider their definition and implications in accounting. Accrued but unpaid expenses refer to costs that have been incurred but not yet paid or recorded in cash.
Step 2: Relevant Concepts
In accounting, accrued expenses are classified as:
- Expense: The cost incurred during the accounting period.
- Liability: An obligation to pay for the expenses incurred in the future.
Step 3: Analysis and Detail
- Expense Nature: Accrued expenses are recognized on the income statement and reduce net income.
- Liability Nature: Since these expenses are unpaid at the end of the period, they create an obligation or liability to pay in the future.
Therefore, the correct characterization of accrued but unpaid expenses is that they are both an expense and a liability.
Step 4: Verify and Summarize
After analyzing the different elements, we confirm that while accrued expenses impact the income statement as an expense, they simultaneously create a financial obligation, classifying them as a liability.
Final Answer
The amount of accrued but unpaid expenses at the end of the period is both an expense and c. a liability.
Similar Questions
Which of the following is an example of a liability?Accumulated depreciationRevenue received in advanceAllowance for doubtful debtsPrepayments
Liabilities are classified on the statement of financial position as current or: Group of answer choices non-current. deferred. accrued. unearned.
Accrued liabilities are recorded only when payment is made.Group of answer choicesFalseTrue
Which of the following is contra-asset account?Multiple choice question.Depreciation ExpenseAllowance for Doubtful AccountsDeferred RevenueCommon Stock
Accumulated depreciation is an: A. contra revenue account. B. liability account. C. contra asset account. D. expense account.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.