The recognition of an expense may be accompanied by which of the following?
A)An increase in liabilities
B)A decrease in liabilities
C)A decrease in revenue
D)An increase in assets

Question

Quizplus · Accepted Answer

When an expense is recognized, it is usually accompanied by an increase in liabilities, which represent the amount of money owed by the company for that expense. For example, if a company recognizes an expense for salaries, it will increase its liabilities (i.e. the amount owed to employees for their services). However, options B, C and D are incorrect because they represent the opposite effects. A decrease in liabilities would not be associated with recognizing an expense, as it would suggest that the company is paying off its debts instead of incurring new ones. Similarly, a decrease in revenue or an increase in assets would not be directly related to recognizing an expense.

The Recognition of an Expense May Be Accompanied by Which