Identify the Journal Entry Required to Correctly Record the Following

question 6

Multiple Choice

Identify the journal entry required to correctly record the following transaction. Income tax for the year estimated.

• A) Dr Income tax expense
• Cr Retained profits
• B) Dr Taxes payable
• Cr Income tax expense
• C) Dr Income tax expense
• Cr Taxes payable
• D) Dr Income tax expense
• Cr Cash at bank

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Rent Revenue

Income earned from leasing out property or space.

Liability-revenue Relationship

A financial concept that examines the connection between a company's incurred liabilities and the revenue generated over a certain period.

Deferred Revenue

Revenue recorded by a corporation for products or services that have not yet been provided or executed, classified as an obligation.