Recording Incurred but Unpaid Expenses | CFA Level 1 Exam Prep

Incurred but Unpaid Expenses

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Question

At the end of an accounting period, each expense that has been incurred but not yet paid should be recorded as

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A. B. C. D.

C

Expenses should be recognized in the period in which they are incurred. In order to be consistent with the matching principle, an adjusting entry must be made to record the expense, regardless of whether it has been paid.