Which of the following transaction types can typically be made into recurring journal entry templates in financial accounting systems?

• A. Prepaid insurance amortization
• B. Depreciation expense
• C. Accrued expenses
• D. Inventory purchases

Answer: (C)

Verified step by step guidance

1. Understand the concept of recurring journal entries: These are journal entries that are repeated periodically, often for transactions that occur regularly and have predictable amounts or patterns.
2. Analyze each transaction type to determine if it is suitable for a recurring journal entry template. For example, Prepaid insurance amortization involves allocating the prepaid insurance expense over time, which is predictable and periodic.
3. Consider Depreciation expense: Depreciation is the systematic allocation of the cost of an asset over its useful life. Since this calculation is consistent and periodic, it is suitable for a recurring journal entry template.
4. Evaluate Accrued expenses: These are expenses incurred but not yet paid, such as utilities or wages. If the amounts are predictable or based on estimates, they can be set up as recurring journal entries.
5. Assess Inventory purchases: Inventory purchases are typically variable and depend on business needs, making them less suitable for recurring journal entry templates unless the purchases are consistent and predictable.