🎴 Flashcard Mode
Theoretical Framework of Accounting
Card1 / 25
Mastered0
Review0
QuestionClick to flip
Expenses are reflected in the form of
AnswerClick to flip back
A
outflow of assets or incurrence of liabilities
💡 Explanation:
Expenses represent outflows of economic benefits during a period. This happens either through cash outflow (decrease of assets like cash) or by incurring liabilities (increase of creditors). For example, paying rent decreases cash (asset outflow), or purchasing on credit increases accounts payable (liability incurrence). Option A describes revenue, not expenses.