An Accounts Payable Is an Unwritten Promise to Pay a Supplier

question 57

True/False

An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.

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Definitions:

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash transaction happens.

Revenue Recognition

The accounting principle that dictates the specific conditions under which income becomes realized as revenue.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Prepayments

Payments made in advance for goods or services, which are recorded as assets on the balance sheet until the corresponding goods or services are received.