On December 31,a decision is made to accrue an expense and report a current liability.How many accounts will be included in this journal entry?
A)None.
B)One.
C)Two.
D)Three.

Question

Quizplus · Accepted Answer

To accrue an expense and report a current liability, two accounts are typically included in the journal entry: an expense account to recognize the expense and a liability account to record the obligation to pay the expense in the future. Additionally, depending on the specific transaction, a third account may be included such as a prepaid expense account if the payment was made in advance. Therefore, the answer is (C) Two.

On December 31,a Decision Is Made to Accrue an Expense