What Is the Liability Called That Arises from an Expense

question 49

Multiple Choice

What is the liability called that arises from an expense that the business has incurred but has not yet paid?

• A) It is called a deferred expense.
• B) It is known as an unearned expense.
• C) It is referred to as an accrued expense.
• D) It is called a prepaid expense.

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Definitions:

Direct Labor Cost

The total expense that a company incurs for labor directly involved in the production of goods or services, including wages and benefits.

Machine-Hours

A measure of production time, tracking how many hours machines are operating in the manufacturing process.

Predetermined Overhead Rate

This rate is calculated before the period begins and is used to apply manufacturing overhead costs to products based on a consistent formula.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, including factory rent, salaries of permanent staff, and equipment depreciation.