What Is the Liability Called That Arises from an Expense

question 125

Multiple Choice

What is the liability called that arises from an expense that the business has incurred but has not yet paid?

• A) It is known as an unearned expense.
• B) It is called a deferred expense.
• C) It is called a prepaid expense.
• D) It is referred to as an accrued expense.

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Definitions:

Adjusted Subsidiary Value

The valuation of a subsidiary company after making necessary adjustments to its assets and liabilities to reflect fair value or to eliminate intercompany transactions.

Preferred Stock

A category of corporate ownership that ranks above common stock regarding asset and earning claims, typically paying out dividends at a fixed rate.

Outstanding Common Stock

The total shares of common stock that are currently held by shareholders, including those held by the public as well as restricted shares owned by the company’s officers and insiders.

Acquisition-Date Fair Value

The valuation of an asset or liability obtained at the time it is acquired or assumed in a business combination.