Prior to the adjusting process, accrued expenses have:

• A. been incurred but not yet recorded or paid
• B. been paid and recorded as assets
• C. been paid and recorded as liabilities
• D. been recorded as revenues

Answer: (A)

Verified step by step guidance

1. Understand the concept of accrued expenses: Accrued expenses are costs that have been incurred during a specific accounting period but have not yet been recorded in the books or paid. These are liabilities because the company owes money for these expenses.
2. Analyze the options provided: The correct answer should align with the definition of accrued expenses. Review each option carefully to determine which one matches the concept.
3. Option 1: 'Been incurred but not yet recorded or paid' - This matches the definition of accrued expenses, as they are costs that have been incurred but not yet recorded or paid.
4. Option 2: 'Been paid and recorded as assets' - This is incorrect because accrued expenses are liabilities, not assets, and they have not been paid yet.
5. Option 3: 'Been paid and recorded as liabilities' and Option 4: 'Been recorded as revenues' - Both are incorrect because accrued expenses are unpaid liabilities, not revenues or paid liabilities.