COMMERCE 1AA3 Lecture Notes - Lecture 6: Net Income, Retained Earnings, Deferral
23 Feb 2017
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Matching principle: expenses have been recorded in the period in which expenses have been incurred. Midterm - unearned revenue is an example of what? expense, revenue, liability or asset ans: liability. Assets, liabilities, revenues, expenses ans: liabilities. When payment has been received but service not provided, for the receiver, it is a liability and the account name is unearned revenue (e. g unearned rent revenue or unearned insurance revenue. For the receiver we call it deferred revenue or simply deferral. For the payer, it is an asset called prepaid expense or simply prepayments. On the other hand, if service has been provided but cash not received: For the service provider, there is an asset called a/r and the second amount is revenue (single earned). For the service receiver we have an expense (since service used) and a liability (for amount owed) called. Paid rent on jan 1 for january: On quiz always use brackets for subtracting dividends!!!
