Which of the following statements relating to expenses is not true?
A) Expenses result in an increase in owners' equity.
B) Expenses may arise through immediate cash payments or through promises to pay cash in the future for services received.
C) Expenses result from costs incurred normally to earn revenue.
D) Cash may be paid out before expenses are incurred.

Question

Quizplus · Accepted Answer

Expenses result in a decrease, not an increase, in owners' equity. Owners' equity is reduced by expenses because they represent costs incurred to earn revenue, which reduces the amount of profit or net income that contributes to owners' equity.

Which of the Following Statements Relating to Expenses Is Not