PRC-1 · Chapter 4 · Question 59 of 100
Why is it necessary for an accountant to formally account for accrued expenses at the end of the financial year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) So that profit is not overstated.
Explanation
Accrued expenses represent costs incurred during the year. If they are not recorded, total expenses will be artificially low, which in turn will cause the reported profit to be overstated.
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