On June 30,Sugar Co.received a bill for $4,200 for running a newspaper ad in June.The bill will be paid in July.Which of the following statements is correct for June?
A)Liabilities are decreased by $4,200.
B)Assets are increased by $4,200.
C)Expenses are increased by $4,200.
D)Revenues are decreased by $4,200.

Question

Quizplus · Accepted Answer

In the accounting period that an expense is incurred,a company has to record the expense,which increases expenses.Since this expense is not going to be paid until the following month,a liability must also be recorded,which increases liabilities.