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 situations would most likely require an adjusting entry for accrued revenues at the end of an accounting period?

Supplies have been purchased and paid for in cash.

Salaries have been paid to employees for the current period.

Services have been performed but not yet billed to customers.

Cash has been received in advance for services to be performed next month.

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Verified step by step guidance

Understand the concept of accrued revenues: Accrued revenues are revenues that have been earned but not yet recorded in the accounting period because the cash has not been received or the services have not been billed.

Analyze the given situations: Review each scenario to determine whether it involves revenues that have been earned but not yet recorded. Supplies purchased and paid for in cash, salaries paid to employees, and cash received in advance for services do not involve accrued revenues.

Focus on the correct scenario: Services performed but not yet billed to customers represent accrued revenues because the company has earned the revenue but has not yet recorded it in the accounting system.

Determine the need for an adjusting entry: An adjusting entry is required to record the revenue earned during the period and recognize it in the financial statements, even though the cash has not been received.

Prepare the adjusting entry: The adjusting entry would typically involve debiting Accounts Receivable (to recognize the amount owed by customers) and crediting Revenue (to record the earned revenue).