PRC-1 · Chapter 4 · Question 96 of 100
If the closing balance of an accrued expense account is higher than its opening balance, this mathematically indicates that:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Cash paid during the year was less than the expense incurred.
Explanation
An increasing accrual balance means the business incurred more expense during the year than the amount of cash it actually paid out to settle those expenses.
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