How should the business record the transaction in the books of the business?

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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.

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