Increase an expense; increase a liability. b. includes a credit to an expense account. 5. D) Increase an expense; decrease an asset. To record and accrued expense, Debit Expense account (p/l) Credit Accrued expense (b/s) The expense account is usually in debit hence the transaction above increases the balance. Prior to recording adjusting entries at the end of an accounting period, some accounts may not show correct balances even though all transactions were properly recorded. It is credited to accrued expenses on the liability side of the balance sheet. The increase in accrued expense is complemented by an increase in corresponding expense account in the income statement. Likewise, it will affect both the income statement and the balance sheet after adjusting entry. d. includes a debit to a payable account. The adjusting entry to record an accrued revenue is: A. 0 Decrease a liability, increase revenue. The adjusting entry for Accounts Payable in general journal format is: The balance in the liability account Accounts Payable at the end of the year will carry forward to the next accounting year. Essential Points to Note about Accrued Expense Journal Entry. True False 12. Let’s say you are responsible for paying the $27.40 accrued interest from the previous example. A) Increase an expense; increase a liability. Increase an expense; increase a liability. Accrued Expenses Increase expense Understate expense Overstates net income Increase liability Understate liability Understate total liabilities ... recorded prior to preparing and recording the adjusting entry. 0 Increase an expense; decrease a liability. The adjusting entry to record accrued expenses a. is the same journal entry as recording expenses on account. Example. At the end of the accounting period, you should make an adjusting entry in your general journal to set up property taxes payable for the amount of taxes incurred but not yet paid. True False 13. The accrual basis of accounting recognizes revenues when cash is received from customers. C) Decrease a liability; increase revenue. The balance in Repairs & Maintenance Expense at the end of the accounting year will be closed and the next accounting year will begin with $0. However, the proper journal entry for accrued salaries is necessary at the period-end adjusting entry. Your journal entry would increase your Interest Expense account through a $27.40 debit and increase your Accrued Interest Payable account through a $27.40 credit. Increase an asset; increase revenue. When payment is due, and the customer makes the payment, an accountant for that company would record an adjustment to accrued revenue. 0 Increase an expense; increase a liability. • Accrued Revenues – are revenues that have been earned, but have not been recorded. 149. c. differs from the journal entry to record an expense payable on account. B) Increase an asset; increase revenue. The journal entry of accrued salaries will increase both the expense account and the liability account. The adjusting entry to record an accrued expense is: Multiple Choice 0 Increase an expense; decrease an asset. Example Estimated property taxes of $5,200 were assessed on July … C. Decrease a liability; increase revenue. A company usually recognizes an increase in accrued expenses immediately as it occurs. Adjusting entries are Step 5 in the accounting cycle and an important part of accrual accounting. 0 Increase an asset; increase revenue. 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