Avalon Event Planning Services Records Deferred Expenses and Deferred Revenues

question 142

True/False

Avalon Event Planning Services records deferred expenses and deferred revenues using the alternative treatments.It makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On October 1,it paid $3,700 for insurance for a one-year period.At the end of the year,it will make an adjusting entry that debits Insurance Expense for $1,850.

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Definitions:

Mortgage

A secured loan where property or real estate is used as collateral, with the borrower agreeing to pay back the loan with a predetermined set of payments.

Bankruptcy Petition

A legal document filed by an individual or corporation declaring inability to repay debts, thus seeking relief through bankruptcy court.

Liquidated

The process of converting assets into cash or paying off liabilities in the winding up of a business or partnership.