easy · Financial Accounting accounting-cycle-financial-statements

Under the accrual basis, if a firm incurs a $3,000 utility bill in December but does not pay it until January, which statement is true for the December financial reports?

1. The $3,000 should be recorded as a 'Prepaid Utility' asset in December.
2. The $3,000 should be ignored because the bill has not yet been received.
3. No expense should be reported until the cash is paid in January.
4. The $3,000 should be reported as an expense in December.

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