Question
Asked Nov 26, 2019
38 views

 

Phone companies bill their customers after they provided them with cellular service. So if a customer receives their October phone usage during the month of November. From the phone company's perspective, they make an adjusting entry at the end of October if they want the revenue they earned at the end of the month shows up on the October income statement. From the company's perspective would this adjusting entry be an example of accrual or a deferral, why?

check_circle

Expert Answer

Step 1

So basically there are two concepts regarding this from accounting perspective:

  1. Deferred Revenue
  2. Unbilled Revenue
Step 2
  1. Deferred Revenue: When money is received in advance, and the concerned goods and service have not yet been provided. In this scenario, cash is received, but is recognized as income in the income statement in the period in which the goods and service are provided. Any advance payment received would come under this category.
  2. Unbilled Revenue: The r...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Other

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Parrish Ch. 4 Pg. 97 4-2  (Date 11/25/19)(Analysis of Period-end Measurements and Adjusting Process)...

A: A trial balance is prepared by the company with the help of balances of various accounts. The accura...

question_answer

Q: When using the periodic inventory system, which of the following generally would not be separately a...

A: Periodic inventory system: The method or system of recording the transactions related to inventory o...

question_answer

Q: What is the meaning of Frieght Inward and Frieght outward?

A: Freight-inward: Freight-inward is a transportation cost related with the acquisition of goods. In is...

question_answer

Q: Sheridan Corp. incurred $890000 of research and development costs to develop a product for which a p...

A: Research and development costs are expensed in the period in which it is incurred. Thus, the researc...

question_answer

Q: Dauring the year, Kiner Company made an entry to write off a $32,000 uncollectible account. Before t...

A: Accounts receivable:Accounts receivable is the amount of cash owed to the company by the customer fo...

question_answer

Q: Directions: Select accounts from the ledger of Garrison Company appear below. For each account, indi...

A: a. Indicate the type of account.

question_answer

Q: What are the five differences between Bills Payable and Bills Receivable?

A: Bills payable: Bills payable is a document that reflects the amount to be paid by an individual or a...

question_answer

Q: Marigolds has the following inventory data: Nov. 1   Inventory   23 units @ $4.70 each 8   Pu...

A: The LIFO strategy works under the presumption that the last item of stock acquired, is the item that...

question_answer

Q: Consider these transactions: (Credit account titles are automatically indented when amount is entere...

A: (a)