U4, AOS 1 - Accrued Expenses Flashcards
What is an accrued expense?
An accrued expense is an accounting expense recognized in the books before it is paid.
True or False: Accrued expenses are recorded when the cash is paid.
False
Provide an example of an accrued expense.
Salaries payable at the end of a pay period.
What type of account is an accrued expense classified as?
A liability account.
Fill in the blank: Accrued expenses are typically recorded at the end of the _______.
accounting period.
True or False: Accrued expenses can include interest expenses.
True
What is the journal entry to record an accrued expense?
Debit the expense account and credit the accrued liability account.
Multiple Choice: Which of the following is NOT an example of an accrued expense? A) Rent payable B) Utilities payable C) Cash paid for services
C) Cash paid for services
True or False: Accrued expenses are settled in the next accounting period.
True
What happens to accrued expenses when they are paid?
They are removed from the liability account and cash is decreased.
Fill in the blank: Companies report accrued expenses on their _______.
balance sheet.
True or False: Accrued expenses impact the income statement.
True
What is the effect of accrued expenses on net income?
They decrease net income in the period they are recognized.
Multiple Choice: Which of the following is an accrued expense? A) Advertising expense B) Office supplies purchased C) Wages earned but not paid
C) Wages earned but not paid
True or False: Accrued expenses can be estimated.
True
What is the primary purpose of recognizing accrued expenses?
To match expenses with revenues in the correct accounting period.
Fill in the blank: Accrued expenses are recorded in the _______ period they are incurred.
same
True or False: An accrued expense will always have a corresponding cash outflow in the same period.
False
What role do accrued expenses play in the accrual basis of accounting?
They ensure expenses are recorded when incurred, not necessarily when paid.
Multiple Choice: Which of these is a common accrued expense? A) Dividend declared B) Rent expense C) Cash sales
B) Rent expense
