Final answer:
b)before a cash payment
Accrued liabilities are costs incurred before cash payments are made and are recognized on the balance sheet under current liabilities. They are an essential part of the accounting matching principle, ensuring expenses are recorded when they are incurred, not when cash is paid, affecting bank capital.
Step-by-step explanation:
Accrued liabilities are costs that have been incurred in an accounting period before a cash payment is made. They are a reflection of the company's obligation to pay for goods or services that have been received but not yet paid for.
In terms of a balance sheet, accrued liabilities appear under current liabilities and may include expenses such as wages, taxes, and interest that are recognized in the financial statements before they are paid out.
The concept is tied to the matching principle in accounting, which states that expenses should be recorded during the period in which they are incurred, regardless of when the transfer of cash occurs. This helps manage asset-liability time mismatch as well as provide a more accurate financial picture of the company's current obligations.
The importance of understanding accrued liabilities extends to various financial and business concepts, such as assessing a company's bank capital — its net worth — which can be affected by the timing and size of these liabilities. The management of coins and currency in circulation is more related to monetary policy than the concept of accrued liabilities.