Concept explainers
Unearned Revenue:
Unearned revenue occurs when payment for goods and services are received in advance, that is, company receives money before actual delivery of goods and services. As a result, the unearned revenue represents the liability of the company.
Accrued Expense:
Accrued expenses are the expenses recognized in the books of account before making the actual payment. As per accrual system of accounting, expenses are recognized in the period when they are incurred, thereby creating a liability on the company.
Account Receivables:
Account receivables are the revenues earned by the company but not received in actual (or billed). It means goods or services have been provided by the company but it is yet to receive its payment, thereby constitute current assets of the company.
Prepaid Insurance:
Prepaid insurance is the amount of insurance premium paid before the due date. It is amount of insurance premium which is unutilized at the date of balance sheet.
Depreciation:
Annual depreciation expense is a non cash expense which is charged against the value of fixed assets.
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FINANCIAL ACCT.FUND.(LOOSELEAF)
- If an adjustment includes an entry to a payable or receivable account, which type of adjustment is it? A. accrual B. deferral C. estimate D. cullarrow_forwardIf adjusting entries include these listed accounts, what other account must be in that entry as well? (A) Depreciation expense; (B) Unearned Service Revenue; (C) Prepaid Insurance; (D) Interest Payable.arrow_forwardIdentify which type of adjustment is associated with this account, and what the other account is in the adjustment. Choose accrued revenue, accrued expense, deferred revenue, or deferred expense. A. Salaries Payable B. Interest Receivable C. Unearned Fee Revenue D. Prepaid Rentarrow_forward
- Describe the effect on the financial statements when an adjustment is prepared that records (a) unrecorded revenue and (b) unrecorded expense.arrow_forwardWhat adjusting journal entry is needed to record depreciation expense for the period? A. a debit to Depreciation Expense; a credit to Cash B. a debit to Accumulated Depreciation; a credit to Depreciation Expense C. a debit to Depreciation Expense; a credit to Accumulated Depreciation D. a debit to Accumulated Depreciation; a credit to Casharrow_forwardAdjusting entries affect at least one balance sheet account and at least one income statement account. For the entries below, identify the account to be debited and the account to be credited from the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense; and Depreciation Expense. Indicate which of the accounts is the income statement account and which is the balance sheet account.arrow_forward
- Fill in the blank associated with each adjusting entry: a. Prepaid expense: Debit Supplies Expense; credit ___________. b. Deferred revenue: Debit ___________; credit Service Revenue. c. Accrued expense: Debit ___________; credit Salaries Payable. d. Accrued revenue: Debit Accounts Receivable; credit ___________.arrow_forwardWhich of the following appears in the balance sheet accounts section of a pre-adjustment trial balance? A) Opening inventory B) Accrued expenses C) Consumable inventory D) Fixed depositarrow_forwardEXTENDING ADJUSTED BALANCES TO THE INCOME STATEMENT ANDBALANCE SHEET COLUMNS Indicate with an “X” whether each account totalshould be extended to the Income Statement Debit or Credit or to the Balance Sheet Debit or Credit columns on the work sheet.arrow_forward
- What adjusting entries would you pass in respect of income received in advance, outstanding expenses, accrued income and depreciation?arrow_forwardEntry 4 5 6 7 8 CO 3 2 9 1 10 Explanation Interest Expense Interest Payable Depreciation Expense Accumulated Depreciation Unearned Revenue Services Revenue Insurance Expense Prepaid Insurance Salaries Payable Cash Prepaid Rent Cash Salaries Expense Salaries Payable Interest Receivable Interest Revenue Cash Journal Entries Cash expense. Accounts Receivable (from consulting) Unearned Revenue Cash Debit 1,300 4,400 3,600 3,700 2,000 4,500 5,600 5,400 8,200 7,100 2,200 Credit 1,300 4,400 3,600 3,700 2,000 4,500 5,600 5,400 8,200 7,100arrow_forwardThree different lease transactions are presented below for Sandhill Enterprises. Assume that all lease transactions start on January 1, 2024. Sandhill does not receive title to the properties, either during the lease term or at the end of it. The yearly rental for each of the leases is paid at the beginning of each year. Sandhill Enterprises prepares its financial statements using ASPE. Lease term Estimated economic life Yearly rental payment Fair market value of leased asset Present value of lease rental payments Interest rate Manufacturing Equipment 5 years 15 years $18,000 $126,000 $81,270 3.5% Vehicles 6 years 7 years $19,260 $109,200 $100,962 4% Office Equipment 3 years 5 years $5,010 $22,500 $12,912 8% Ass me that Sandhill Enterprises has purchased the vehicle for $109,200 instead of leasing it and that the amount borrowed was $109,200 at 8% interest, with interest payable at the end of each year. Prepare the entries for 2024. (List all debit entries before credit entries. Credit…arrow_forward
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