Accounting Quiz 2
Incurred operating EXPENSE on account
liability: accounts payable; no cash paid bc it's an expense, also record subtracted amt under expense
Received a CASH ADVANCE
liability: unearned revenue, also record cash amt under cash
Unearned Revenue
liability; cash amount received in advance before providing services; CASH ADVANCE
Accounts Payable
liability; cash amount to be paid in the future; EXPENSES
Expenses are incurred
recognize expense
Service is provided
recognize revenue
Cash advance is a
liability, unearned revenue
Types of liabilities
Accounts Payable+Unearned Revenue
Types of assets
Cash+Accounts Receivable
May 23: Received cash of $1,200 for service performed on account on May 15
Record 1200 under cash and in parenthesis under accounts receivable
May 20: Paid $400 cash for expenses incurred on account on May 3
Record 400 in parenthesis under cash and in parenthesis under accounts payable (liability)
May 31(b): Adjusted entry for: Paid $400 for a one-month leasing fee in advance
Record 400 in parenthesis under prepaid rent (asset) and subtract it under expense
May 1(b): Paid $400 for a one-month leasing fee in advance
Record 400 parenthesis under cash and under prepaid rent (asset)
May 15: Performed $4,200 of services on account
Record 4200 under accounts receivable (assets) and under revenue
May 2: Incurred $500 of operating expenses on account
Record 500 under accounts payable (liability) and subtracted under expense
May 31(a): Adjusted entry for: Received a $700 cash advance from a customer for the services to be performed over a month beginning on May 1
Record 700 in parenthesis under unearned revenue (liability) and under revenue
May 1(a): Received a $700 cash advance from a customer for the services to be performed over a month beginning on May 1
Record 700 under cash and under unearned revenue (liability)
Paid cash for EXPENSES incurred on account
Record in parenthesis under cash and then in parenthesis under accounts payable
Received cash for service performed ON ACCOUNT
Record under cash and then in parenthesis under accounts receivable
Types of retained earnings
Revenue-Expense-Dividend
Performed services ON ACCOUNT without receiving cash
asset: accounts receivable; no cash received, recognize revenue bc service was provided
Prepaid Expense
asset; cash amount paid in advance before expense is incurred; ex include rent, insurance
Accounts Receivable
asset; cash amount to be received in the future