which of the following is a true statement regarding expenses?\na. expenses represent future benefit to the…

which of the following is a true statement regarding expenses?\na. expenses represent future benefit to the company.\nb. expenses will never result in the creation of a liability account.\nc. the critical event for recording salary expense is the payment of cash.\nd. the expense recognition principle recognizes expenses in the same period in which the related revenues are earned.

which of the following is a true statement regarding expenses?\na. expenses represent future benefit to the company.\nb. expenses will never result in the creation of a liability account.\nc. the critical event for recording salary expense is the payment of cash.\nd. the expense recognition principle recognizes expenses in the same period in which the related revenues are earned.

Answer

Brief Explanations:

  • Option A: Expenses are costs incurred, not future benefits. So this is false.
  • Option B: For example, when a company incurs an expense but hasn't paid yet (e.g., accrued utilities), it creates a liability (accounts payable). So this is false.
  • Option C: The critical event for recording salary expense is when the employees have provided the service (accrual basis), not when cash is paid. So this is false.
  • Option D: The expense recognition principle (matching principle) states that expenses should be recognized in the same period as the related revenues. This is a fundamental accounting principle.

Answer:

D. The expense recognition principle recognizes expenses in the same period in which the related revenues are earned.