Question

For an expense that was accrued for last month what must an accounting department do the next month?

A. Adjustment entry
B. Nothing
C. An accrual reversal
D. Debit cash, credit expense

Answer 1

For an expense that was accrued in the previous month, the accounting department should perform C)an accrual reversal in the subsequent month.

Step-by-step explanation:

For an expense that was accrued for last month, the accounting department should typically perform an accrual reversal in the next month once the actual expense is paid.

This reversal entry is a common practice in accrual basis accounting which helps to match revenues with expenses in the period in which they occur, regardless of when cash transactions take place.

By reversing the accrual, the accountants ensure that the expense isn't recorded twice—once as an accrued liability and again when it's paid.

Therefore, the correct answer to what an accounting department must do the next month for an expense that was accrued for last month is: C. An accrual reversal.