Question

Activity 3.a - Identifying adjustments as Deferrals / Prepaids or Accrual

Label the adjustments as either Deferrals / Prepaids, Accrual, or Depreciation AND as a revenue or expense.

HINT Activity 3.a - Identifying adjustments as Deferrals / Prepaids or Accrual Label the adjustments as either Deferrals / Prepaids, Accrual, or Depreciation AND as a revenue or expense. View drag and drop keyboard instructions Deferrals / Prepaids Accrual Prepaid Expense Expense Unearned Revenue Revenue Accrued Revenue Accrued Expense Depreciation Completed services that were paid for six months earlier, $1,400. Work performed but not yet billed to customer, $2,900. Customers were billed for $3,200 for work completed. Drag card here Drag card here Drag card here CHECK ANSWER

Answer 1

i.Completed Services that were paid for six months earlier, $1,400:

Answer: Deferred, Unearned revenue

Explanation: At the time of cash received from customer it is Unearned revenue. It is deferred and revenue should be recognized only when the services are performed.

ii.Work performed but not yet billed to customer, $2,900:

Answer: Accrued revenue, Accrual

Explanation: Say, may be services performed on the last day of the year and billed to customer next year. In that case, revenue should be recognized in the current year because it was accrued on the current year.

iii.Customers were billed for $3,200 for work completed:

Answer: Accrued revenue, Accrual

Explanation: Customers billed for work completed. It was accrued when the work has been completed.