In Accrual Basis Accounting, When Are Expenses Usually Recognized

question 60

Multiple Choice

In accrual basis accounting, when are expenses usually recognized?

• A) When cash is paid
• B) When assets are purchased
• C) When incurred
• D) When assets are ordered

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Definitions:

Total Expenses

The sum of all costs and expenses incurred by a business during a given period, including operating and non-operating expenses.

Net Income

Net income is the profit a company makes after deducting all its costs and expenses from its total revenue.

Statement of Stockholders' Equity

A financial statement that shows the changes in the value of a company's equity over a specific period.

Common Stock

Shares of ownership in a corporation, granting holders voting rights and a portion of profits in the form of dividends.