An adjusting entry for accrued expenses:

A Decreases liabilities

B Recognizes expenses incurred but not yet paid

C Records cash payments

D Closes revenue accounts

✓ Correct Answer: Option B

Accrued expenses are costs incurred but not yet paid or recorded, requiring an adjusting journal entry.

💡 Why is B) the correct answer?

The correct answer to the question "An adjusting entry for accrued expenses:" is Option B: Recognizes expenses incurred but not yet paid.

The other options — A) Decreases liabilities, C) Records cash payments, D) Closes revenue accounts — are incorrect for this CPA Exam Prep question. As explained above: Accrued expenses are costs incurred but not yet paid or recorded, requiring an adjusting journal entry.

📚 About This CPA Exam Prep Practice Question

This 2-level CPA Exam Prep question from the Financial Accounting (FAR) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

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An adjusting entry for accrued expenses:

✓ Correct Answer: Option B

📚 About This CPA Exam Prep Practice Question

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