The Adjusting Entry Required When Amounts Previously Recorded as Deferred

question 74

Multiple Choice

The adjusting entry required when amounts previously recorded as deferred revenues are recognized includes:

• A) A debit to a liability.
• B) A debit to an asset.
• C) A credit to a liability.
• D) A credit to an asset.

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Definitions:

Fees Earned

Income received from providing services, typically recorded when the service is rendered, not when the payment is received.

Supplies Expense

Expenditures related to consumable supplies used in the operating activities of a business during a specific period.

Dividends

Payments made by a corporation to its shareholder members. It's often quoted as the amount each share receives (dividends per share).

Unearned Rent

Income received for rent before the rental period has occurred, recorded as a liability until the period passes.