On July 25, Henry Company's accountant prepared a check for the August rent payment. Henry Company mailed the check on July 27 to the landlord. The landlord received the check on July 31 and cashed it on August 2. When should Henry Company record the rent expense associated with this transaction? Henry Company uses accrual accounting.

Question

Quizplus · Accepted Answer

Under accrual accounting, expenses are recorded when they are incurred, not when they are paid. Since the rent is for August, the expense should be recorded in August, not when the check was prepared, mailed, or cashed.

On July 25, Henry Company's Accountant Prepared a Check for the August