Question

Classify the following items as (a) accrued revenue, (b) accrued expense, (c) unearned revenue, or (d) prepaid expense: 1. A two-year premium paid on insurance policy. 2. Fees earned but not yet received. 3. Fees received but not yet earned. 4. Salary owed but not yet paid. 5. Subscriptions received in advance by a magazine publisher. 6. Supplies on hand. 7. Taxes owed but payable in the following period. 8. Utilities owed but not yet paid.

Answer 1

Answer: Classification

Explanation:

Accrued revenue

1. Fees earned but not yet received

Accrued Expense

These are expenses that have been incurred but not yet paid for in the current accounting period.

1. Salary owed but not yet paid.

2. Taxes owed but payable in the following period.

3. Utilities owed but not yet paid.

Unearned Revenue

This represents income received before it is earned and they represent a liability to the receiver.

1. Fees received but not yet earned.

2. Subscriptions received in advance by a magazine publisher.

Prepaid Expense

They are expenses paid in advance

1. A two year premium plan paid on insurance policy

2. Supplies on hand.

Answer 2

Explanation:

Accrued Revenue:

These are income or revenue that have been made or earned for services or goods provided, but the payment or cash for the services or goods provided have not been received.  

i) Fees earned but not yet received

Accrued Expense:

These are expenses of services or goods that have been provided but the payment have not yet been made.

i) Salary owed but not yet paid.

ii) Taxes owed but payable in the following period.

iii) Utilities owed but not yet paid.

Unearned Revenue:

These are payments made in advance for providing services or goods, i.e amounts received for services or goods that have not yet been provided or performed.

i) Fees received but not yet earned.

ii) Subscriptions received in advance by a magazine publisher.

Prepaid Expense:

These are expenses that have been paid in advance but are not yet used up or have not yet expired

i)  A two year premium plan paid on insurance policy

ii)  Supplies on hand.