Accrued expenses result in an adjustment to both the income statement and the statement of financial position.

Question

Quizplus · Accepted Answer

Accrued expenses are expenses that have been incurred but not yet paid or recorded in the books. Therefore, an adjustment is required in both the income statement and the statement of financial position to reflect the current financial position of the company. The income statement is adjusted for the expenses incurred, while the statement of financial position is adjusted by increasing the liabilities and decreasing the equity or assets.

Accrued Expenses Result in an Adjustment to Both the Income