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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
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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

  1. Expense Nature: Accrued expenses are recognized on the income statement and reduce net income.
  2. 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.

This problem has been solved

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