Which of the following is true of unearned revenue? It is a liability account that is increased when cash is received but not yet earned. It is a revenue account that is increased when the cash is received, whether or not it has been earned. When unearned revenue is received, both total liabilities and total revenue are increased. O When unearned revenue is earned, both total assets and total revenue are increased. When unearned revenue is earned, total assets are increased and total liabilities are decreased.

Which of the following is true of unearned revenue? It is a liability account that is increased when cash is received but not yet earned. It is a revenue account that is increased when the cash is received, whether or not it has been earned. When unearned revenue is received, both total liabilities and total revenue are increased. O When unearned revenue is earned, both total assets and total revenue are increased. When unearned revenue is earned, total assets are increased and total liabilities are decreased.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 1MCQ: Which of the following statements is true? Under cash-basis accounting, revenues are recorded when a...

See similar textbooks

Similar questions

Revenue earned but not yet collected is an example of which of the following? A. accrued expense B. accrued revenue C. deferred expense (prepaid expense) D. deferred revenue (unearned revenue)
Which of the following is not a criterion to recognize revenue under GAAP? A. The earnings process must be completed. B. A product or service must be provided. C. Cash must be collected. D. GAAP requires that the accrual basis accounting principle be used in the revenue recognition process.
Consider the following accounts and determine if the account is an asset (A), a liability (L), or equity (E). A. Accounts Receivable B. Sales Revenue C. Land D. Unearned Revenue
What is the impact on the accounting equation when an accounts receivable is collected? A. both sides increase B. both sides decrease C. only the Asset side changes D. the total of neither side changes
Which of the following statements is true? Under cash-basis accounting, revenues are recorded when a company satisfies its performance obligations and expenses are recorded when incurred. Accrual-basis accounting records both cash and noncash transactions when they occur. Generally accepted accounting principles require companies to use cash-basis accounting. The key elements of accrual-basis accounting are the revenue recognition principle, the expense recognition principle, and the historical cost principle.
What is the impact on the accounting equation when a payment of account payable is made? A. both sides increase B. both sides decrease C. only the Asset side changes D. neither side changes
Expenses represent outflows of assets or increases in liabilities as a result of efforts to produce revenues.
Which one of the following statements about revenue is not correct?A. Revenue can result in increases in accounts receivableB. Revenue can result in increases in liabilitiesC. Revenue is earned whenever cash is received from a customerD. Revenue is earned when a service is provided to a customer
Under accrual accounting, when are revenue and expenses recognized? Revenue is recognized when cash is received; expenses are recognized when the costs are incurred. Revenue is recognized when cash is received; expenses are recognized when cash is paid. Revenue is recognized when earned; expenses are recognized when cash is paid. Revenue is recognized when earned; expenses are recognized when the costs are incurred.
UNDER THE ACCRUAL BASIS OF ACCOUNTING, IF CASH IS RECEIVED PRIOR TO THE SALE, THEN: A. REVENUE IS RECOGNIZED WHEN THE CASH IS RECEIVED. B. A LIABILITY IS RECOGNIZED WHEN CASH IS RECEIVED. C. A LIABILITY IS REMOVED FROM THE SYSTEM WHEN THE CASH IS RECEIVED. D. REVENUE IS REMOVED FROM THE SYSTEM WHEN THE SERVICES HAVE BEEN PERFORMED OR THE GOODS HAVE BEEN DELIVERED.
Which of the following normally has a net credit balance? A. Asset accounts such as cash, accounts receivable, inventory, and equipment B. Expenses that decrease retained earnings C. Dividends that decrease retained earnings D. Revenues that increase retained earnings
a To record this period’s depreciation expense. b To record accrued salaries expense. c To record this period’s use of a prepaid expense. d To record accrued interest revenue. e To record accrued interest expense. f To record the earning of previously unearned income. g To record cash receipt of unearned revenue. h To record cash payment of an accrued expense. i To record cash receipt of an accrued revenue. j To record cash payment of a prepaid expense. In the blank space beside each adjusting entry, enter the letter of the explanation A through F that most closely describes the entry.