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 best describes the accounts affected by an adjusting entry for accrued expenses?

A debit to an expense account and a credit to a liability account

A debit to a revenue account and a credit to an asset account

A debit to a liability account and a credit to an expense account

A debit to an asset account and a credit to a revenue account

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Verified step by step guidance

Understand the concept of accrued expenses: Accrued expenses are expenses that have been incurred but not yet paid or recorded in the accounts. These require an adjusting entry at the end of the accounting period to ensure the financial statements reflect the correct expense and liability amounts.

Identify the accounts involved: When recording accrued expenses, the expense account is increased (debited) to recognize the incurred expense, and the liability account is increased (credited) to reflect the obligation to pay in the future.

Analyze the options provided: The correct adjusting entry for accrued expenses involves a debit to an expense account (to record the expense) and a credit to a liability account (to record the obligation).

Eliminate incorrect options: Review each option and eliminate those that do not match the correct treatment of accrued expenses. For example, debiting a revenue account or crediting an asset account would not be appropriate for accrued expenses.

Select the correct answer: Based on the analysis, the correct description of the accounts affected by an adjusting entry for accrued expenses is 'A debit to an expense account and a credit to a liability account.'