Question

Baldwin Company incurred and recorded an expense for material costs that have not yet been paid as of year-end. On the balance sheet, they will most likely be reported as:
a) cost of goods sold
b) deferred expenses
c) accrued expenses

Answer 1

Answer:

It will be reported as accrued expenses (c)

Explanation:

Accrued expenses represents amount owed for either serviced that has been enjoyed or goods that have been delivered but yet to be paid for.

Income statement is prepared on accrual basis, hence, these expenses will be recognized in the current period and matched with revenues generated.