An example of an explicit transaction is
A)accruing interest payable at the end of the fiscal year.
B)recognizing depreciation expense.
C)cash disbursement for the payment of 3 months' rent in advance.
D)accruing wages payable at month end.
E)recognizing rent expense by reducing prepaid rent.

Question

Quizplus · Accepted Answer

A cash disbursement for the payment of 3 months' rent in advance is an explicit transaction because it involves a clear and immediate exchange of cash for a future benefit. The other options are examples of accrual accounting transactions where revenue or expense is recognized at the time it is earned or incurred, respectively, regardless of when cash is actually exchanged.

An Example of an Explicit Transaction Is