Question

As of December 31,2017, Liberty company has not yet received the electric bill for their December usage. Liberty records a journal entry dated December 31, 2017 for $650 based on past usage. The $650 represents (blank) on Libertys financial statements; A. Accrued expense B. Deferred expense C. Deferred revenue D. Accrued revenue.

Answer 1

Electricity expense has been incurred , but the ill has not been received .So the expense has been accrued and not paid.So the $650 represents A. Accrued expense The entry for the same will A. Accrued expense be as below:

Electricity Expense a/c            Dr. 650

       To Accounts Payable                   650