An Expense Occurred in 2016, but It Is Not Paid

question 206

Multiple Choice

An expense occurred in 2016, but it is not paid until 2017. Using accrual accounting, the expense should appear on:

• A)the 2016 income statement.
• B)the 2017 income statement.
• C)whichever income statement the business prefers.
• D)both the 2016 and 2017 income statements.

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Definitions:

Farm Subsidies

Financial support and assistance given by the government to farmers and agribusinesses to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities.

Agricultural Output

The total quantity of agricultural products, such as crops and livestock, produced within a given period.

Capital Equipment

Long-term assets, such as machinery, buildings, or vehicles, that a business uses in the production of goods or services.

Farm Subsidies

Financial assistance provided by government to farmers, intended to stabilize food prices, ensure a stable food supply, and support farmers' incomes.