Final answer:
The statement is false because when an advertising bill is incurred but not yet paid, it results in an increase in both Advertising Expense and liability, not a decrease in liability.
Step-by-step explanation:
The statement that an advertising bill incurred but unpaid is recorded as an increase in Advertising Expense and a decrease in liability is False. When a company incurs an expense but has not yet paid it, it should record the expense and a corresponding liability.
The entry would include an increase (debit) to Advertising Expense and an increase (credit) to a liability account, such as Accounts Payable. This reflects the company's obligation to pay the bill in the future.
The statement is False. When an advertising bill is incurred but unpaid, it represents a liability for the company. Therefore, it should be recorded as an increase in Accounts Payable (liability) and a decrease in Cash or Accounts Receivable (asset), not as an increase in Advertising Expense.