Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 2 - No. 25)
Which of the following statements is true regarding accrued expenses?
Accrued expenses are recorded only when the cash payment is made.
Accrued expenses should be charged to profit in the accounting year they are paid.
An accrued but unpaid expense should be charged to profit in the accounting year it was used to the benefit of the business.
Accrued expenses do not need to be recorded in the accounting records.
Explanation
Accrued expenses represent expenses incurred during the current accounting period but not yet paid. They are recognized in the period they benefit the business, regardless of when cash is paid.
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