A utility bill of $8,760 covers three months and has not yet been paid. One month has been incurred by month-end. What accrued utility expense should be recorded?
Correct Answer
A) $2,920
One month of a three-month bill is one third of $8,760.
Why This Is the Correct Answer
One month of a three-month bill is one third of $8,760.
Why the Other Options Are Wrong
Option B: $3,000
$3,000 is above the supported result for accrued expense; it likely adds an unsupported amount or compares the wrong financial base.
Option C: $5,840
$5,840 is above the supported result for accrued expense; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $8,760
$8,760 is above the supported result for accrued expense; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Accrued Expense drawer for Recording Utilities: label month before counting dollars.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Three, Recording After the Event, Accrued Expenses; use the job ledger figures in the stem and recompute the same accounting measure.
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