Multiple Choice
Which of the following journal entries records the adjustment for revenue that has been earned but not yet collected at the end of the accounting period?
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3. Accrual Accounting Concepts
Adjusting Entries: Accrued Revenues
Multiple Choice
Adjusting entries for accrued revenues affect at least one of which of the following types of accounts?
A
Expense account and liability account
B
Revenue account and asset account
C
Liability account and revenue account
D
Asset account and equity account
Verified step by step guidance1
Understand the concept of accrued revenues: Accrued revenues are revenues that have been earned but not yet received in cash or recorded. These require adjusting entries to ensure proper recognition in the accounting period.
Identify the accounts affected by accrued revenues: Accrued revenues typically increase a revenue account (to recognize the earned revenue) and an asset account (to record the receivable).
Review the options provided in the problem: Analyze each option to determine which pair of accounts aligns with the impact of accrued revenues. For example, accrued revenues do not affect expense accounts or liability accounts.
Match the correct answer with the concept: Since accrued revenues increase revenue and asset accounts, the correct answer is 'Revenue account and asset account.'
Reinforce the principle: Adjusting entries for accrued revenues ensure compliance with the accrual basis of accounting, which recognizes revenues when earned, regardless of cash receipt.
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