Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Revenues

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Accrued Revenues

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Multiple Choice

Which of the following best describes accrued revenue?

Revenue that is recognized after all related expenses have been paid.

Revenue that is recorded only when cash is received.

Revenue that has been earned but not yet received in cash or recorded at the end of the accounting period.

Revenue that has been received in cash but not yet earned.

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Verified step by step guidance

Understand the concept of accrued revenue: Accrued revenue refers to revenue that has been earned by providing goods or services but has not yet been received in cash or recorded in the accounting books by the end of the accounting period.

Eliminate incorrect options: Review each option and compare it to the definition of accrued revenue. For example, 'Revenue that is recognized after all related expenses have been paid' is incorrect because accrued revenue is not dependent on the payment of expenses.

Analyze the second option: 'Revenue that is recorded only when cash is received' describes cash-basis accounting, not accrued revenue, which is recognized under accrual accounting principles.

Evaluate the fourth option: 'Revenue that has been received in cash but not yet earned' describes unearned revenue, not accrued revenue. Unearned revenue is a liability until the service or product is delivered.

Select the correct option: The correct description of accrued revenue is 'Revenue that has been earned but not yet received in cash or recorded at the end of the accounting period.' This aligns with the accrual accounting principle of recognizing revenue when it is earned, regardless of cash receipt.