Prepaid items for which adjusting entries may be necessary include all of the following except:

Prepaid items for which adjusting entries may be necessary include all of the following except:

	A.	prepaid insurance
	B.	prepaid rent
	C.	unearned revenue
	D.	office supplies

Solutions

Expert Solution

--Correct Answer = Option 'C' Unearned Revenues

--All other options are 'prepaid', that is, cash has already been paid. BUT, Unearned revenues include cash 'received' in advance for services that are not yet performed. Hence, it is not technically 'prepaid' (rather 'pre-received')

--Remember, all of the options mentioned above REQUIRE adjusting entries. BUT Prepaid Insurance, Prepaid rent and Office Supplies adjusting entry will include expense expired or consumed during the period that was already PREPAID.

ekkarill92 answered 1 year ago

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