PRC-1 · Chapter 10 · Question 72 of 100
If a business adjusts for an accrued electricity expense of Rs. 1,100 at year-end, what is the impact on Current Liabilities?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Current Liabilities increase by Rs. 1,100.
Explanation
An accrued expense creates a liability (Accrued Electricity) because the business owes this amount at year-end. Therefore, Current Liabilities increase.
More Preparation of Financial Statements MCQs
- Q74A business has opening inventory of Rs. 40,000 and closing inventory of Rs. 50,000. What is the effect of this inventory movement on the…
- Q75An entity records a write-down of inventory from its cost of Rs. 240,000 to its Net Realizable Value of Rs. 234,000. What is the adjusting…
- Q76When an entity prepares its financial statements, where should an 'Allowance for Doubtful Debts' be presented?
- Q77A business owner takes goods costing Rs. 2,000 from the shop for personal use. What is the double entry required to record this?
- Q78Which of the following is NOT typically classified as an operating expense in the Statement of Comprehensive Income?