If an expense has been incurred but will be paid later,then:
A)nothing is recorded on the financial statements.
B)a liability account is created or increased and an expense is recorded.
C)an asset account is decreased or eliminated and an expense is recorded.
D)a revenue and an expense are recorded.

Question

Quizplus · Accepted Answer

When an expense has been incurred but will be paid later, it is referred to as an accrued expense. It is recorded as a liability because the company owes money for the expense that has been incurred but not yet paid. At the same time, an expense is also recorded to reflect the cost incurred. Therefore, choice B is the correct answer.

If an Expense Has Been Incurred but Will Be Paid