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 best describes the adjusting entry to record an accrued revenue at the end of an accounting period?

Debit Revenue; Credit Accounts Receivable

Debit Cash; Credit Revenue

Debit Accounts Receivable; Credit Revenue

Debit Revenue; Credit Unearned Revenue

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Verified step by step guidance

Understand the concept of accrued revenue: Accrued revenue refers to income that has been earned but not yet received in cash or recorded in the accounts by the end of the accounting period.

Identify the accounts involved: When recording accrued revenue, the two accounts affected are 'Accounts Receivable' (an asset account) and 'Revenue' (a revenue account).

Determine the nature of the adjustment: Since the revenue has been earned but not yet received, we need to increase (debit) 'Accounts Receivable' to reflect the amount owed to the company and increase (credit) 'Revenue' to recognize the income earned.

Write the journal entry: The adjusting entry to record accrued revenue is: Debit 'Accounts Receivable' and Credit 'Revenue'. This ensures that the revenue is recognized in the correct accounting period, adhering to the accrual basis of accounting.

Review the incorrect options: The other options provided (e.g., Debit Revenue; Credit Accounts Receivable) do not align with the correct treatment of accrued revenue. For example, debiting 'Revenue' would decrease it, which is incorrect in this context.