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What is the adjusting entry at the end of a period for unearned service revenue?
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If an adjusting entry were not made at the end of a period to remove the earned revenue from the unearned revenue account?
That would mean that the liabilities would be understated.
What type of account is Unearned revenue and what its normal balance?
Unearned revenue is a liability account. It is revenue that is received in one fiscal period despite the fact that revenue is not earned until another fiscal period. Its normal balance is credit.
Is unearned revenue a current or a long liabilities?
Unearned revenue is generally considered a current liability. The only time it would be a long term liability would be if the company does not reasonably expect to "earn" the revenue withing one year or less or one accounting period.
Why are adjusting entries needed at the end of an accounting period?
Adjusting Entries are journal entries that are made at the end of the accounting period, to adjust expenses and revenues to the accounting period where they actually occurred. Generally speaking, they are adjustments based on reality, not on a source document. This is in sharp contrast to entries during the accounting period (such as utility bills or fees for services rendered) that depend on source documents.
What are unearned revenues?
Unearned revenues -Advance payments for goods or services that a company must provide in a future accounting period
If an adjusting entry were not made at the end of a period to remove the earned revenue from the unearned revenue account?
That would mean that the liabilities would be understated.
What type of account is Unearned revenue and what its normal balance?
Unearned revenue is a liability account. It is revenue that is received in one fiscal period despite the fact that revenue is not earned until another fiscal period. Its normal balance is credit.
Is unearned revenue a current or a long liabilities?
Unearned revenue is generally considered a current liability. The only time it would be a long term liability would be if the company does not reasonably expect to "earn" the revenue withing one year or less or one accounting period.
Is there any instances whereby unearned revenue could be classified as non current liability?
Yes, there could be instances where unearned revenue is classified as a non-current liability. This typically occurs when the company has received advance payment for goods or services that will be provided beyond one year or the operating cycle, whichever is longer. In such cases, the unearned revenue is recorded as a liability that will be recognized as revenue over a longer period.
Why are adjusting entries needed at the end of an accounting period?
Adjusting Entries are journal entries that are made at the end of the accounting period, to adjust expenses and revenues to the accounting period where they actually occurred. Generally speaking, they are adjustments based on reality, not on a source document. This is in sharp contrast to entries during the accounting period (such as utility bills or fees for services rendered) that depend on source documents.
What are unearned revenues?
Unearned revenues -Advance payments for goods or services that a company must provide in a future accounting period
Is unearned rent closed on a income summary at the end of a fiscal year?
Unearned Rent is rent paid in advance to one company/person from another. Unearned Rent is a liability until it is earned. Unearned rent is "not" closed on an income summary at the end of the fiscal year. Unearned rent is never actually "closed" but actually brought down to a zero balance account.For example, your company was paid rent for December 2010, and January and February 2011 in the amount of say $15,000 and on December 31, 2010 your fiscal year ends and you are closing your books and the December rent paid to you expires (is used up for December) your entry will be a debit to unearned rent for $5,000 and a credit to Rent Revenue for $5,000. This still leaves a balance of $10,000 in unearned rent for the following year (Jan. and Feb.)Let's look at another scenario, say you charge $3,000 a month for rent and your company is paid for the full year (Jan.-Dec.) Your first entry to record such a payment is a debit to cash $36,000 and a credit to unearned rent $36,000As each month expires you remove the amounts in increments of $3,000 until the account balance in unearned rent is zero, then at the end of the accounting period, rent revenue is closed to the income summary, not unearned rent.
What is the purpose of adjusting entry?
The purpose of the preparation of adjusting entries is to ensure that revenues are being recorded during the period they are earned and expenses are being recorded during the period they are incurred.
A nazard true or false-accrual convention is when the revenue earned for a particular period is added to the expenses involved in making the revenue in that period-accounting?
It is false. The right answer is ,the revenue is matched with expenses involved in making the revenues in that period.\the difference will produce a profit or loss.
The activity variance for revenue is unfavorable if the actual revenue for the period is less than the revenue in the static planning budget true or false?
true
Revenue is properly recognized?
Revenue is properly recognized as an income at the end of an accounting period. Any form of money received is regarded as revenue.
Revenue accounts should begin each accounting period with zero balances?
should revenue accounts begin each accounting period with zero balance
