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 an example of an adjusting entry for accrued revenues?

Debiting Salaries Expense and crediting Salaries Payable for salaries owed but not yet paid

Debiting Accounts Receivable and crediting Service Revenue for services performed but not yet billed

Debiting Prepaid Insurance and crediting Insurance Expense for expired insurance

Debiting Unearned Revenue and crediting Service Revenue for cash received in advance

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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. Adjusting entries for accrued revenues ensure that revenue is recognized in the period it is earned, even if payment has not been received.

Review the options provided: Each option represents a different type of adjusting entry. You need to identify the one that matches the definition of accrued revenues.

Analyze the correct answer: Debiting Accounts Receivable and crediting Service Revenue reflects an adjusting entry for accrued revenues. This entry records revenue earned but not yet billed to the customer, aligning with the accrual basis of accounting.

Compare the other options: The other options represent different types of adjusting entries, such as accrued expenses (e.g., salaries owed but not paid), prepaid expenses (e.g., expired insurance), and unearned revenue (e.g., cash received in advance). These do not pertain to accrued revenues.

Conclude the reasoning: The correct adjusting entry for accrued revenues involves recognizing revenue earned but not yet billed, which is achieved by debiting Accounts Receivable and crediting Service Revenue.