Arkady makes an accrual for accounting and tax advisory fees in his financial statements for the year ended 31 May 20X8..Which one of the following statements correctly describes the effects of the accrual on his statement of financial position?

Question

Quizplus · Accepted Answer

When Arkady makes an accrual for accounting and tax advisory fees, it means that he recognizes an expense (liability) for services already received but not yet paid for. This will increase his liabilities and decrease his capital, as he has incurred an obligation to pay in the future. Therefore, the correct answer is D.

Arkady Makes an Accrual for Accounting and Tax Advisory Fees