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Prepaid expenses depreciation accrued expenses unearned revenues and accrued revenues are all examples of?
Wiki User
∙ 12y ago
Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of
Wiki User
∙ 12y ago
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Do you have to record unearned revenues on income statement?
No. Unearned Revenues are recorded on the Balance Sheet.
What are unearned revenues?
Unearned revenues -Advance payments for goods or services that a company must provide in a future accounting period
Is unearned revenues account is an example of a liability?
no
If an adjustment is needed for unearned revenues...?
If an adjustment is needed for unearned revenues, the liability is overstated and the related revenue is understated before adjustment. Another word for revenue is income.
Distinguish between the two categories of adjusting entries and identify the types of adjustments applicable to each category?
Deferrals are either prepaid expenses or unearned revenues. Adjustments are made for deferrals to record the portion that represents either the expense incurred or the revenue earned. An adjustment for prepaid expenses increases an expense and decreases an asset account. An adjustment for unearned revenue increases a revenue account and decreases a liability account. Accruals are either accrued revenues or accrued expenses. Adjustments are made for accruals to record revenues from services performed that have yet to be collected. An adjustment for accrued revenues increases an asset account and increases a revenue account. An adjustment for accrued expenses increases an expense account and increases a liability account.
Are Cash Fees Earned Unearned Revenues considered nominal accounts?
yes
What are prepaid expenses and prepaid revenues how are they reported on the balance sheet?
Prepaid Expenses:These are expenses for which company has paid in advance but the benefits has not yet received that's why it is an asset of company and shown under current assets in balance sheetPrepaid Revenues or unearned revenues:These are revenues for which company has already received the payment from clients but services or products has not yet supplied so it is a liability of company and shown under current liability section of balance sheet.
Unearned revenue in balance sheet?
Unearned revenue is a liability and is included on the credit side of the balance sheet. Unearned revenues are recognized when customers pay up front for the products/services. As a result, the company has an obligation to the customer to deliver products/render services. When the company has deliverd the products/rendered the services, the liability unearned revenues is reduces and recognized as sales.
Is unearned revenue considered an asset?
No it is a current liability and is not included in the Income Statement, as other revenues would be.
What are the major reasons for accrual accounting?
The accounting method under which revenues are recognized on the income statement when they are earned (rather than when the cash is received). The balance sheet is also affected at the time of the revenues by either an increase in Cash (if the service or sale was for cash), an increase in Accounts Receivable (if the service was performed on credit), or a decrease in Unearned Revenues (if the service was performed after the customer had paid in advance for the service).Under the accrual basis of accounting, expenses are matched with revenues on the income statement when the expenses expire or title has transferred to the buyer, rather than at the time when expenses are paid. The balance sheet is also affected at the time of the expense by a decrease in Cash (if the expense was paid for when it incurred), an increase in Accounts Payable (if the expense will be paid in the future), or a decrease in Prepaid Expenses (if the expense was paid in advance).
Where does unearned service revenue go on a multiple step income statement?
unearned service revenue is on the balance sheet not the income statement so the answer is nowhere. service revenue is on the income statement under revenues.
What is the matching concept in financial accounting?
The Matching Concept: A significant relationship exists between revenue and expenses. Expenses are incurred for the for the purpose of producing revenue. In measuring net income for a period, revenue should be offset by all the expenses incurred in producing that revenue. This concept of offsetting expenses against revenue on the basis of "causes and effect" is called the Matching Concept. The term 'matching' means appropriate association of related revenues and expenses. In matching expenses against revenue the question when the payment was made or received is 'irrelevant'. For example if a salesman is paid commission in January, 2001, for sale made by him in December, 2000. According to this concept commission expense should be offset against sales of December 2000 because this expense is incurred for producing revenue in December 2000. On account of this concept, adjustments are made for all outstanding expenses, accrued revenues, prepaid expenses and unearned revenues, etc, while preparing the final accounts at the end of the accounting period.
