Question

16. The journal entry to record the prior year’s deferred Inflows: property taxes (those expected to be collected more than 60 days beyond year-end) as revenue in the current year would include: A) A debit to Revenues Control B) A debit to Deferred Inflows: Property Taxes C) A credit to Revenues Control D) B and C would

Answer 1

Answer:

Option D - "A debit to deferred inflows (B) and A credit to Revenues control (C)"

Explanation:

Property tax is the tax levied by the government on the owner of a property based on its value, in a particular jurisdiction.

Property tax is usually collected and reported in the financial year in which the tax is paid. However when property tax is collected in one fiscal year or period but reported in a future fiscal year or period, it becomes a 'deferred inflow'.

Hence, the journal entry to record property tax as a deferred inflow would first of all debit the deferred inflows account and credit the revenues (or inflow) account of the  current reporting fiscal year where the property tax is being recognised.

Answer 2

Answer:

D) B and C would both be included in the journal entry

Explanation:

A deferred inflow of resources can be defined as an purchasing of net assets by the government of a country that is is going to be applied to a future reporting period.

Crediting the revenues control account tells weather cash has been received, or that a valid receivable exists. In practice, when property taxes are levied, a receivable is formed. The debit to property taxes that are receivable is offset by a credit to revenues to the level that the taxes are “susceptible to accrual;” that is to say, both measurable and available to pay liabilities of the fiscal period.