Accounting help (1 Viewer)

[mmmm.]

Could someone please explain what it means by:
- assuming it was recorded as a liability/revenue when received
- assuming it was recorded as an asset/expense when paid.
- the company recorded it as a liability/revenue/expense/asset

This is in relation to journal entries and adjusting journal entries.

 

[BLIT2014]

Currently, it looks like the question is incomplete?

Do you have more parts to the question?

 

[mmmm.]

Currently, it looks like the question is incomplete?

Do you have more parts to the question?

here is the question, I just don't understand the differences when making journals if we assume it was recorded as a liability/revenue when received and as an asset/expense was paid.

 

[AuroraXT]

liability refers to unearned revenue so +cash +liability (unearned revenue)
perspective of tenant refers to prepayment so +assets (prepaid rent) -cash
I think expense may refer to accrued expenses accrued expenses so + rent expense + rent payable although not too sure. Someone with more experience may be able to confirm

 

[jimmysmith560]

Hey, I don't major in finance/accounting. However, I did find an answer to an older version of the same question. By older I mean that the years were 2016 and 2017 instead of 2019 and 2020. I think the rest should be the same.



I'm not sure if this will help, but I hope it does!

 

[seremify007]

Hey, I don't major in finance/accounting. However, I did find an answer to an older version of the same question. By older I mean that the years were 2016 and 2017 instead of 2019 and 2020. I think the rest should be the same.

View attachment 30539

I'm not sure if this will help, but I hope it does!

Looks right to me. They're all just variations on the question of the entity booking the full amount into one account whether it be straight to revenue or into an unearned income account, and then doing the adjustment to pro rate the appropriate amount at year end under matching principle.

Where this gets interesting is if you were to ask questions about treatment under the more recent standards around revenue and leases AASB 15 and AASB 16 ... but I suspect whoever authored these questions and changed the dates probably wasn't thinking that deeply.