Which of the Following Transactions Does Not Involve an Accrual

question 99

Multiple Choice

Which of the following transactions does not involve an accrual?

• A)Recording interest earned that will be received in the next period.
• B)Recording operating expense incurred but not yet paid.
• C)Recording salary expense incurred but not yet paid.
• D)Recording the pre-payment of two years' worth of insurance.

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Definitions:

Correcting Entry

An accounting entry made to correct an error in the financial statements.

Supplies Expense

The cost associated with the consumption of supplies used in the operations of a business during an accounting period.

Equipment

Fixed assets used in operations, such as machinery, computers, and furniture, which have a useful life of more than one accounting period.

Adjusting Entries

Adjusting entries are journal entries made at the end of an accounting period to update account balances before preparing financial statements, aligning them with the accrual basis of accounting.