Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 21

For the following questions, circle the best response.

The recognition of liabilities often results in

a. the recognition of expenses.

b. a more conservative representation of financial position.

c. a decrease in net income.

d. a decrease in ROI.

e. all of the above.

Step 1 of 6

(a)

When liabilities are recognized, it often results in the recognition of expenses. However, this does not always occur. Accrued liabilities represent expenses that have been incurred but not yet paid. Examples include accrued property taxes and accrued insurance expenses.