ECONOMICS

Previous
Next

COST ACCOUNTING

COST MANAGEMENT SYSTEMS

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
You have configured your expense items to accrue at receipt. You have created a few purchase orders and want to verify that the supplier invoices have been created. Which accounting entries signal this process has taken place?
A
Debit Charge Account (expense or inventory), Credit Receiving Inspection
B
Debit Accrued Liability, Credit Accounts Payable
C
Debit Receiving Inspection, Credit Accrued Liability
D
Debit Expense, Credit Receiving Inspection
E
Debit Expense, Credit Expense Accrual
Explanation: 

Detailed explanation-1: -An accrued expense journal entry is passed on recording the expenses incurred over one accounting period by the company but not paid actually in that accounting period. The expenditure account is debited here, and the accrued liabilities account is credited.

Detailed explanation-2: -An accrued expense-also called accrued liability-is an expense recognized as incurred but not yet paid. In most cases, an accrued expense is a debit to an expense account.

Detailed explanation-3: -Accrued expenses are listed on a company’s balance sheet. They should appear at the end of the company’s accounting period. Adjustments are made using journal entries that are entered into the company’s general ledger.

Detailed explanation-4: -You accrue expenses by recording an adjusting entry to the general ledger. Adjusting entries occur at the end of the accounting period and affect one balance sheet account (an accrued liability) and one income statement account (an expense).

There is 1 question to complete.
Previous
Next