Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Expenses

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Expenses

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Multiple Choice

Which of the following accounts found on an unadjusted trial balance typically requires an adjusting entry for accrued expenses?

Salaries Payable

Prepaid Insurance

Service Revenue

Common Stock

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Verified step by step guidance

Understand the concept of accrued expenses: Accrued expenses are costs that have been incurred but not yet paid or recorded in the accounts. These require adjusting entries to ensure the financial statements reflect the correct expenses and liabilities.

Identify the accounts listed in the problem: Salaries Payable, Prepaid Insurance, Service Revenue, and Common Stock. Determine which of these accounts is related to accrued expenses.

Analyze each account: Salaries Payable is a liability account that typically requires an adjusting entry for accrued expenses, as it represents salaries earned by employees but not yet paid. Prepaid Insurance is an asset account and does not relate to accrued expenses. Service Revenue is a revenue account and does not involve accrued expenses. Common Stock is an equity account and is unrelated to accrued expenses.

Conclude that Salaries Payable is the account that typically requires an adjusting entry for accrued expenses, as it reflects obligations for unpaid salaries.

To record the adjusting entry for accrued expenses like Salaries Payable, debit the related expense account (e.g., Salaries Expense) and credit the liability account (e.g., Salaries Payable). This ensures the expenses and liabilities are accurately reflected in the financial statements.