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 transactions constitutes an accrual adjustment involving a revenue account?

Services have been performed but not yet billed to clients at the end of the period.

Cash is received in advance from customers for services to be performed in the future.

Supplies are purchased on account for future use.

A customer pays for services at the time the services are performed.

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Verified step by step guidance

Understand the concept of accrual adjustments: Accrual adjustments are made to recognize revenues or expenses in the period they are incurred, regardless of when cash is received or paid.

Focus on the revenue account: An accrual adjustment involving a revenue account occurs when revenue has been earned but not yet recorded in the accounting system.

Analyze the first option: 'Services have been performed but not yet billed to clients at the end of the period.' This describes a situation where revenue has been earned but not yet recorded, requiring an accrual adjustment to recognize the revenue.

Evaluate the second option: 'Cash is received in advance from customers for services to be performed in the future.' This is a deferral adjustment, not an accrual, as revenue is recognized later when the services are performed.

Review the remaining options: 'Supplies are purchased on account for future use' relates to an asset account, not a revenue account, and 'A customer pays for services at the time the services are performed' does not require an adjustment since revenue is recognized immediately.