State Whether Each Situation Is a Prepaid Expense (PE), Unearned

question 265

Short Answer

State whether each situation is a prepaid expense (PE), unearned revenue (UR), accrued revenue (AR) or an accrued expense (AE).
1. Unrecorded interest on savings bonds is $245.
2. Property taxes that have been incurred but that have not yet been paid or recorded amount to $300.
3. Legal fees of $1,000 were collected in advance. By year end 60 percent were still unearned.
4. Prepaid insurance had a $500 balance prior to adjustment. By year end, 40 percent was still unexpired.
5. Unpaid salaries earned by year end but not yet paid or recorded amounted to $1,200.

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Definitions:

Investment Opportunities

Options available to individuals or firms to allocate capital with the expectation of generating financial returns.

Hunger

A physical sensation or condition experienced when the body needs food.

Import Substitution

An economic strategy aimed at reducing dependency on imported goods by encouraging the development of local industries.

Local Industries

Businesses and manufacturing operations that are based within a specific geographic area and often cater to the economic needs of the local population.