If a resource has been consumed but a bill has not been received at the end of the accounting period then
A) an expense should be recorded when the bill is received.
B) an expense should be recorded when the cash is paid out.
C) an adjusting entry should be made recognizing the expense.
D) it is optional whether to record the expense before the bill is received.

Question

Quizplus · Accepted Answer

According to the accrual accounting method, expenses should be recognized when they are incurred, regardless of whether the bill has been received or paid. Therefore, an adjusting entry should be made to recognize the expense even if the bill has not been received. This helps to ensure that the financial statements are accurate and reflect the true financial position of the company. Option A is incorrect because the expense should be recognized when it is incurred, not when the bill is received. Option B is incorrect because the recording of the expense should not depend on when the cash is paid out. Option D is also incorrect because it is not optional to record the expense, as it is a requirement of the accrual method of accounting.

If a Resource Has Been Consumed but a Bill Has