Term Paper: Deferred Revenues
Unearned revenues also referred to as deferred revenues. These are revenues received in cash and recognized as liabilities before they are earned. Deferred revenue is a liability to the entity until the revenue is earned. This might arise if a customer pays a deposit for ordered equipment that has not been delivered to him or her. In this regard, the deposit would be recognized as unearned revenue. In order to adjust this entry, another entry must be created to offset the net effect.
Accrued expenses, also known as accrued liabilities, is expenses already incurred but not yet paid or posted in the general ledger (Steve .A, Stice K, & Stice .D 2010). Examples of these types of adjusting entries could be applicable for payroll effects that have already been earned by employees on the last day of the accounting period; however, they remain unpaid until the next payroll date.
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