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