Question

For both unearned revenues and prepaid expenses, the cash payment occurs __________ the adjusting entry to record the earning of the revenue or the incurring of the expense.
a.after
b.at the same time
c.concurrently with
d.before

Answer 1

Answer:

The correct answer that fills the gap is d. before.

Explanation:

Everything that happens in the business must be registered in the accounting system, so that the newspaper and the major contain a complete history of all the commercial operations of the period. If an operation or transaction has not been registered, account balances will not show the correct figure at the end of the accounting period.

The seats with which the accounts are adjusted or updated are called adjustment seats. If the adjustment does not affect an income or expense account, it is not an adjustment entry.

The income can be earned (accrued) before the cash is received from the client, or from accounting for the transaction in the accounting records. These are revenues that have been earned but the corresponding cash has not yet been collected.

The adjustments made to the income accounts are necessary to ensure that all income earned in the period has been recorded in the accounting. In order for the net profit to be expressed correctly in the income statement. There are two types of income adjustment:

• Cumulative income not collected.
• Customer advances.