If, during an accounting period, an expense item has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve
A) a liability account and an asset account.
B) an asset or contra-asset and an expense account.
C) a liability account and an expense account.
D) a receivable account and a revenue account.

Question

Quizplus · Accepted Answer

If an expense item has been incurred and consumed but not yet paid for or recorded, it indicates a liability has been created. Therefore, the end-of-period adjusting journal entry will include a liability account and an expense account to properly record the expense and the associated liability that has been incurred but not yet paid for. Option A includes an asset account, which is not relevant to this scenario. Option B includes an asset or contra-asset, which is also not applicable to the given scenario. Option D involves a receivable account and a revenue account, which is not relevant to the given scenario.

If, During an Accounting Period, an Expense Item Has Been