Under accrual accounting, rent expense for February, 2016 would be recognized on the income statement in February, 2016 even though it had been paid for in January of 2016.

Question

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Accrual accounting recognizes expenses when they are incurred, not when they are paid. Therefore, even though the rent for February was paid in January, it is recognized as an expense in February since that is when it was incurred.

Under Accrual Accounting, Rent Expense for February, 2016 Would Be