Question

multiple select question
select all that apply
explain your understanding of what an accrued expense is by selecting the statements below which are correct.

they refer to costs that are incurred in a period, but are both unpaid and unrecorded.
adjustments involve increasing both an expense and a liability account.
they are also called accounts receivable.
they refer to earnings which have been earned, but not yet billed.
they are reported on an income statement.
examples of accrued expenses are wages expense and interest expense.

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Explanation:

• Accrued expenses are incurred, unpaid, unrecorded costs in a period, matching option A.
• The adjusting entry for accrued expenses debits (increases) an expense account and credits (increases) a liability account, matching option B.
• Accounts receivable are assets for earned but unpaid revenue, not accrued expenses, so option C is incorrect.
• Earned but unbilled earnings are accrued revenues, not expenses, so option D is incorrect.
• Accrued expenses are expenses, which are reported on the income statement, matching option E.
• Wages owed to employees and interest owed on loans are classic accrued expense examples, matching option F.

Answer:

A. They refer to costs that are incurred in a period, but are both unpaid and unrecorded.
B. Adjustments involve increasing both an expense and a liability account.
E. They are reported on an income statement.
F. Examples of accrued expenses are wages expense and interest expense.