FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
Bartleby Related Questions Icon

Related questions

bartleby

Concept explainers

Question

Two questions here, please answer clearly and thoroughly your help is very appreciated!

First Question
Are there 3 adjusting entries a) Accrual Adjustments b) Prepayments/Deferrals c) Special Adjustments

Second question
I am confused about the accounts used in adjusting entries. The accounts seem to be contradictory.

1. Accrual Adjustment-accounts receivable is debited and Service Revenue is credited. Why is Service Revenue credited? I understand it is a credit account. Why isn't it considered an asset? Revenue is money that is coming into the company correct?

2) Prepayments and Deferrals

accounts used in this entry are Cash/Unearned Revenue and Unearned Revenue/Service Revenue.

Again the confusion here is that Cash is an asset. Revenue should also be an asset because it is money coming into the company. Please explain how I am wrong .

Unearned Revenue/Service Revenue

These are both Revunue accounts. How can they be adjusted at the same time? Why is one a debit account why is one a credit account?

Special Adjustments
The accounts for these type of entries are Income Tax Expense/Income Tax Payable.

Why is Tax used twice? I see how it can be an expense, but I don't see how it would be a payable.

Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education