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 is NOT an example of an adjusting entry for accrued revenues?

Recording cash received in advance for future services

Recording interest earned but not yet received at year-end

Accruing rent revenue earned but not yet collected

Recognizing service revenue for work performed but not yet billed

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Verified step by step guidance

Understand the concept of accrued revenues: Accrued revenues are revenues earned but not yet received in cash or recorded in the accounts. Adjusting entries for accrued revenues ensure that revenue is recognized in the correct accounting period, even if cash has not yet been received.

Review the examples provided in the question: Each option represents a scenario related to revenue recognition. Determine whether each example aligns with the definition of accrued revenues.

Analyze the first option: 'Recording cash received in advance for future services.' This represents unearned revenue, not accrued revenue, because cash is received before the service is performed. Unearned revenue is a liability until the service is completed.

Analyze the other options: 'Recording interest earned but not yet received at year-end,' 'Accruing rent revenue earned but not yet collected,' and 'Recognizing service revenue for work performed but not yet billed' all involve recognizing revenue that has been earned but not yet received or recorded, which fits the definition of accrued revenues.

Conclude that the correct answer is the first option: 'Recording cash received in advance for future services,' as it does not represent an adjusting entry for accrued revenues but rather for unearned revenue.