Question

MC Qu. 4-37 Which of the following best describes when... Which of the following best describes when an accrual adjustment is required? Multiple Choice An expense has been incurred and paid in cash. An expense has been incurred but not yet paid in cash. An expense has not been incurred, but cash has been paid. О O An expense has not been incurred nor has it been paid in cash. < Pray 4 of 10 !!! Neng >

Answer 1

Correct answer is Option (B) An expense has been incurred but not yet paid in cash.

The expense is to be recognized when it is incurred and not when the payment is made. So, at times an entry is passed to record the expense crediting the payable acccount or any other as the case may be. So, the adjustment is needed when expense has already been incurred and payment is not made yet.