The Primary Difference Between Prepaid and Accrued Expenses Is That

question 76

Multiple Choice

The primary difference between prepaid and accrued expenses is that prepaid expenses have:

• A)been incurred and accrued expenses have not.
• B)not been paid and accrued expenses have.
• C)been recorded and accrued expenses have not.
• D)not been recorded and accrued expenses have.

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Definitions:

Distribution

The process of allocating assets, such as cash dividends or stock shares, to shareholders as part of the earnings generated by a company.

Final Settlement

The completion of a financial transaction where the seller delivers the agreed goods or assets and the buyer pays for them as per the terms of the contract.

Profit and Loss Basis

Profit and Loss Basis is a method of accounting that records revenues and expenses as they are earned or incurred, used to determine a company's financial performance over a period.

Liquidation Expenses

Costs associated with converting assets into cash or paying off debt during the winding up of a business.