Accrued expenses*a. decrease liabilitiesb. increase liabilitiesc. increase assetsd. decrease assets
Question
Accrued expenses*a. decrease liabilitiesb. increase liabilitiesc. increase assetsd. decrease assets
Solution
Accrued expenses increase liabilities. So, the correct answer is b. increase liabilities.
Here's why:
Accrued expenses are expenses that a company has incurred but has not yet paid. In accounting, this is considered a liability because it's an amount that the company owes. When an expense is accrued, it is recorded as a current liability on the balance sheet. As more expenses are accrued, the total liabilities of the company increase.
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