Expenses are recorded

Question

Quizplus · Accepted Answer

Expenses are recorded when they are incurred, which means when goods or services are received, regardless of when the payment is actually made. This is in line with the accrual basis of accounting, which matches expenses to the period in which they contribute to generating revenue. Recording expenses when they are paid (A) would result in a distortion of the financial statements, especially if the payment is made in a different accounting period than the one in which the expense was incurred. Recording expenses in advance or when they are due (C) could also result in inaccuracies since it may not reflect the actual timing of when the goods or services were received. Option (D) is incorrect because one of the options listed must be correct.

Expenses Are Recorded