Indicate (A) the Type of Adjustment (Prepaid Expense Unearned Revenue

question 200

Essay

Indicate (a) the type of adjustment (prepaid expense unearned revenue accrued revenue or accrued expense) and (b) the accounts before adjustment (overstated or understated) for each of the following:
1. Supplies of $400 have been used.
2. Salaries of $300 are unpaid.
3. Rent received in advance totaling $500 has been earned.
4. Services provided but not recorded total $700.

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Definitions:

Share Options

Rights granted by a company to its employees or executives that allow them to buy shares of the company at a specified price for a specified period.

Performance Hurdle

A benchmark or specific target set that must be achieved before certain rewards, such as bonuses or stock options, are granted.

Repriced Option

An option whose terms, specifically the strike price, have been adjusted, typically to make the options more favorable for the holder following declines in the market price of the underlying asset.