Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 30 - No. 33)
What is the effect on the financial statements when adjusting for accrued expenses?
It increases assets and liabilities.
It decreases assets and liabilities.
It increases liabilities and decreases retained earnings.
It increases assets and decreases retained earnings.
Explanation
Recognizing an accrued expense increases liabilities and decreases equity (retained earnings).
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