The adjusting entry to recognize an unrecorded expense is necessary:
A) When an expense is paid in advance.
B) When an expense has been neither paid nor recorded as of the end of the accounting period.
C) Whenever an expense remains unpaid at the end of an accounting period.
D) Because the accountant is likely to forget to pay these unrecorded expenses.

Question

Quizplus · Accepted Answer

An adjusting entry to recognize an unrecorded expense is necessary when the expense has been incurred but not yet recorded as of the end of the accounting period. This ensures that the financial statements reflect the accurate expenses for the period. Options A and B are incorrect because paying an expense in advance or an unpaid expense at the end of an accounting period may require other adjusting entries, but not necessarily to recognize unrecorded expenses. Option D is incorrect because forgetting to pay an expense does not make it an unrecorded expense; it would just be a mistake or oversight.

The Adjusting Entry to Recognize an Unrecorded Expense Is Necessary