Duncan Services Records Prepaid Expenses as Expenses When Incurred, and Unearned

question 61

Essay

Duncan Services records prepaid expenses as expenses when incurred, and unearned revenues as revenues when the payment is received in advance. At the end of the year, Duncan makes the necessary adjustments based on accrual basis accounting. On July 1, Duncan paid rent for an office in the amount of $24,000 for the period July 1 through June 30 of the following year. Provide the year-end adjusting entry for rent prepayment.

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Definitions:

Contraposition

A method in logic for deriving a new statement by reversing and negating both the subject and predicate of the original statement.

Universal Proposition

A statement or proposition that asserts something of all members of a specific class or category.

Referents

Objects or events in the world that words or phrases refer to or denote.

Complement

A term designating the class of all things excluded by another term.