The recognition of an expense does not depend on the payment of cash.

Question

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The recognition of an expense is based on the matching principle of accounting, which requires that expenses be recognized in the period in which they are incurred, regardless of whether or not cash has been paid. In other words, an expense is recognized when the goods or services are received or consumed, not when the payment is made. This is why there is a distinction between cash basis accounting and accrual basis accounting, with the latter being the generally accepted method for most businesses.

The Recognition of an Expense Does Not Depend on the Payment