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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following journal entries correctly records the adjustment for income tax accrued at the end of an accounting period?

Debit Cash; Credit Income Tax Expense

Debit Income Tax Payable; Credit Income Tax Expense

Debit Income Tax Expense; Credit Income Tax Payable

Debit Income Tax Expense; Credit Cash

Previous problemNext problem

Verified step by step guidance

Understand the concept of accrued income tax: Accrued income tax represents the amount of tax expense incurred during the accounting period but not yet paid. It is recorded as a liability (Income Tax Payable) until payment is made.

Analyze the correct journal entry: The adjustment for income tax accrued involves recognizing the expense incurred and the liability created. This means debiting the Income Tax Expense account to record the expense and crediting the Income Tax Payable account to reflect the liability.

Review why other options are incorrect: For example, 'Debit Cash; Credit Income Tax Expense' is incorrect because cash is not involved in the accrual process; cash is only affected when the tax is paid. Similarly, 'Debit Income Tax Payable; Credit Income Tax Expense' reverses the accrual entry, which is not appropriate for recording the adjustment.

Understand the correct journal entry format: The correct entry is 'Debit Income Tax Expense; Credit Income Tax Payable.' This ensures the expense is recorded in the current period and the liability is recognized for future payment.

Apply this understanding to similar problems: Whenever you encounter accrued expenses, remember the principle of debiting the expense account and crediting the payable account to properly reflect the financial position.