If a Resource Has Been Consumed but an Invoice Has

question 50

Multiple Choice

If a resource has been consumed but an invoice has not been received at the end of the accounting period, then

• A) an expense should be recorded when the invoice is received.
• B) an expense should be recorded when the cash is paid out.
• C) an adjusting entry should be made recognizing the expense.
• D) it is optional whether to record the expense before the invoice is received.

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Definitions:

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, providing an overview of a business or person's financial condition.

Functional Currency

The currency of the primary economic environment in which an entity operates, usually determining how financial statements are presented.

Presentation Currency

The currency in which a company's financial statements are reported, chosen by the company to suit its primary audience's needs.

Recorded

The process of formally documenting transactions and events in the financial records of an entity.