Which of the Following Transactions Will Not Result in the Recognition

question 3

Multiple Choice

Which of the following transactions will not result in the recognition of an expense?

• A) Interest accrued on a bank loan
• B) Declaration and payment of a dividend
• C) Use of machinery during the period
• D) Expiration of prepaid insurance

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Definitions:

Ending Retained Earnings

The portion of net income left after dividends have been distributed to shareholders, reflected at the end of an accounting period.

Work Sheet

A work sheet is an informal business document used for preparing financial statements and facilitating the end-of-period accounting process, often in an Excel spreadsheet or similar format.

Adjusting Entries

These are journal entries made in an accounting system to update account balances prior to preparing financial statements, ensuring that all revenues and expenses are recorded in the appropriate periods.

Work Sheet

An informal financial statement usually used internally to prepare financial statements and support accounting operations.