How should the business record the transaction in the books of the business?
Understand the Problem
The question is asking how a business should record an unpaid internet bill for July 2023 in its financial books. This involves understanding the concepts of accrued expenses and liabilities.
Answer
Accrued expenses and a current liability.
The final answer is accrued expenses and a current liability.
Answer for screen readers
The final answer is accrued expenses and a current liability.
More Information
Since the internet was used in July but not paid for by the end of the fiscal year, the expense should be recorded as incurred with a corresponding liability.
Tips
Common mistakes include recording it as an expense in the following year instead of the year it's incurred, or forgetting to account for the liability.
Sources
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