acct 2001

What is the normal balance for revenue accounts?

Credit.

What is the normal balance for expense accounts?

Debit.

What is the journal entry when cash is collected and revenue is recognized?

Debit Cash, Credit Revenue.

What is 'unearned revenue'?

A liability account representing cash collected before the service or product is delivered.

What is the journal entry for the cash collection before revenue is earned?

Debit Cash, Credit Unearned Revenue.

What occurs when revenue is recognized after cash collection?

The journal entry involves debiting Unearned Revenue and crediting Revenue.

What is 'accrued revenue'?

Revenue that is recognized before cash is collected.

What is the journal entry for accrued revenue?

Debit Accounts Receivable, Credit Revenue.

When cash is collected from customers on account, what is the journal entry?

Debit Cash, Credit Accounts Receivable.

What is a prepaid expense?

An asset representing cash paid for benefits expected to be received in the future.

What is the journal entry for paying cash in advance for an expense?

Debit Prepaid Expense, Credit Cash.

What journal entry is made when an expense is recognized but not yet paid?

Debit Expense, Credit Accounts Payable.

What is the main accounting principle governing revenue recognition?

Revenue should be recognized when it is earned.

What happens to equity when revenue is recognized?

It increases due to an increase in retained earnings.

What is the journal entry when recognizing an expense at the time it occurs?

Debit Expense, Credit Cash.

What do we call the time when revenue or expense recognition does not coincide with cash transactions?

Timing differences.

How does a deferral affect the financial statements?

It delays the recognition of revenue or expense until a future period.