The Adjusting Entry to Record an Accrued Expense Increases Liabilities

question 39

True/False

The adjusting entry to record an accrued expense increases liabilities.

Understand the concept of "creative destruction" and its significance in economic progress.

Understand the concept of price discrimination and its conditions.

Identify factors influencing a firm's decision to engage in price discrimination.

Recognize how price discrimination affects consumer prices based on demand elasticity.

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Definitions:

Income Summary Account

A temporary account used in accounting to transfer revenues and expenses at the end of an accounting period; its balance is ultimately transferred to retained earnings.

Owner's Capital Account

A line item in a firm's balance sheet that shows the value of the proprietor's invested capital and the accumulated profits retained within the company.

Credited

An accounting entry that increases a liability or equity account, or decreases an asset or expense account.

Permanent Accounts

Accounts in the general ledger that are not closed at the end of the accounting period, including asset, liability, and equity accounts.