BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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WHICH OF THE FOLLOWING ADJUSTING ENTRIES MAY NOT REQUIRE REVERSING ENTRY?
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ACCRUED INCOME
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ACCRUED EXPENSE
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PREPAID EXPENSE USING THE EXPENSE METHOD
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DEFERRED INCOME USING THE LIABILITY METHOD
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Explanation:
Detailed explanation-1: -Option (e)-The nature of the adjusting entries is not to reverse the prepaid expenses and unearned income.
Detailed explanation-2: -Entries related to accrued incomes, unearned revenues, prepaid expenses, accrued expenses can be reversed at the beginning of the period. Hence, b is the correct option for this.
Detailed explanation-3: -Answer and Explanation: Explanation: Cash is never involved in adjusting entries.
Detailed explanation-4: -When adjusting journal entries, you generally will never need to create an adjusting journal entry for the cash account. Accountants debit cash throughout the month to record inflows of cash and credit the cash account to reflect money going out of the business.
There is 1 question to complete.