Which of the following transactions does not involve an accrual?
A) recording revenue that has been earned but not yet received
B) recording interest expense incurred but not yet paid
C) recording salary expense incurred but not yet paid
D) recording the pre-payment of two year's worth of insurance

Question

Quizplus · Accepted Answer

The pre-payment of two years' worth of insurance is a deferral transaction, not an accrual transaction. Accruals involve recognizing and recording expenses or revenues that have been incurred but not yet paid or received, respectively. Pre-payments are transactions where an expense (or revenue) is paid (or received) in advance and then recorded as an asset (or liability) until it is recognized as an expense (or revenue) in the future.

Which of the Following Transactions Does Not Involve an Accrual