19. on december 30, xyz company (which uses the accrual method of accounting) incurred a $20,000 repair…

19. on december 30, xyz company (which uses the accrual method of accounting) incurred a $20,000 repair expense pertaining to its heating system. the invoice has not been received as of december 31. how should xyz report the $20,000 repair on its december 31 financial statements? select... no need to report as an accrued expense and liability

19. on december 30, xyz company (which uses the accrual method of accounting) incurred a $20,000 repair expense pertaining to its heating system. the invoice has not been received as of december 31. how should xyz report the $20,000 repair on its december 31 financial statements? select... no need to report as an accrued expense and liability

Answer

Explanation:

Step1: Understand accrual - accounting principle

Under the accrual method of accounting, expenses are recognized when they are incurred, not when cash is paid.

Step2: Analyze the situation

XYZ Company incurred a $20,000 repair expense on December 30. Even though the invoice has not been received as of December 31, the expense has been incurred in the accounting period ending December 31.

Step3: Determine the reporting

This expense should be reported as an accrued expense and a liability on the December 31 financial statements.

Answer:

As an accrued expense and liability