Question

Chapter 3:  The Adjusting Process (Continued)

1. Please explain what accrued expenses are and let us know why these adjustments are necessary. Please provide an example of an adjusting entry for an accrued expense.

2. Please explain what accrued revenues are and let us know why these adjustments are necessary. Please provide an example of an adjusting entry for accrued revenues.

3. Please explain what an Unearned Revenue account is and why an adjustment may be necessary for Unearned Revenue. Please provide an example of an adjusting entry for Unearned Revenue.

Responses to Classmates:

Please provide your classmates with one additional example of an accrued expense adjustment and an accrued revenue adjustment.

Response to Instructor:

Please check your thread for questions or comments from me and be sure to provide a comprehensive response, as requested.

Writing:

Please make sure that your initial post contains a properly cited reference. Please use APA style. You should cite your text as a minimum. Additionally, check your spelling and proofread your post before you hit the submit button.

Answer 1

1. Accrued expenses and why adjustments are necessary :

Accrued expenses are expenses, which has been incurred but not paid in accounting period. Expenses must record in the accounting period in which it incurred rather than the period in which it has been paid.

Example: Utilities expenses bill has been received for the month of Feb in March; In that case, expense must record in Feb period as

Utilities expense a/c Dr   XXX

Utilities expense payable                              XXX

2. Accrued revenue :

Simply accrued revenue means revenue earned in that period whereas amount is not collected from customer yet.

Example: Interest income accrued for the period of Feb but not received yet.

Accrued interest Dr   XXX

Interest income                                XXX

3. Unearned revenue :

Unearned revenue is nothing but Liability has been made payment in advance.

Example: Rent payment made in advance

Unearned revenue   XXX

Cash                                                      XXX

I hope this will help you. If requires clarification, you may comment below.