1.If a company uses accrual basis accounting, accrued revenues differ from deferred revenues in that accrued...

1.If a company uses accrual basis accounting, accrued revenues differ from deferred revenues in that accrued revenues are

a) recorded as liabilities before the cash is collected from customers.

b) recorded as liabilities before they are recognized as revenue earned.

c) recognized as revenue earned after cash is collected from customers.

d) recognized as revenue earned before cash is collected from customers.

e) journalized only when cash is collected from customers.

2. A company paid $24,000 for six months of rent beginning June 1. The company recorded its payment as prepaid rent. If it prepares financial statements dated June 30, the adjusting entry to be made by the company is

a) debit Rent Expense for $24,000 and credit Prepaid Rent for $24,000.

b) debit Rent Expense for $4,000 and credit Prepaid Rent for $4,000.

c) debit Prepaid Rent for $4,000 and credit Cash for $4,000.

d) debit Prepaid Rent for $4,000 and credit Rent Expense for $4,000.

e) debit Rent Expense for $20,000 and credit Prepaid Rent for $20,000.

Expert Solution

ekkarill92 answered 2 years ago

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