An example of an explicit transaction is ________.
A) recording depreciation expense
B) paying cash for three months' rent in advance
C) accruing wages expense at the end of the month
D) accruing interest expense at the end of the year

Question

Quizplus · Accepted Answer

Paying cash for three months' rent in advance is an explicit transaction because it involves an immediate exchange of cash for a specific asset or service. It is easy to identify the amount, timing, and terms of the transaction, making it explicit. The other options involve accrual accounting, which records expenses or revenues when they are incurred or earned, rather than when cash is exchanged. While these transactions are still important and affect a company's financial statements, they are not as explicit as paying cash for a transaction.

An Example of an Explicit Transaction Is ________