For the following situations, indicate whether each involves a deferred expense

Question

For the following situations, indicate whether each involves a deferred expense (DE), a deferred revenue (DR), an accrued liability (AL), or an accrued asset (AA).  

Example:  DE Office supplies purchased in advance of their use

__________ 1. Wages earned by employees but not yet paid

__________ 2. Cash collected from subscriptions in advance of publishing a magazine

__________ 3. Interest earned on a customer loan for which principal and interest have not yet been collected

__________ 4. One year

For the following situations, indicate whether each involves a deferred expense (DE), a deferred revenue (DR), an accrued liability (AL), or an accrued asset (AA). Example: DE Office supplies purchased in advance of their use __________ 1. Wages earned by employees but not yet paid __________ 2. Cash collected from subscriptions in advance of publishing a magazine __________ 3. Interest earned on a customer loan for which principal and interest have not yet been collected __________ 4. One year's premium on life insurance policy paid in advance __________ 5. Office building purchased for cash __________ 6. Rent collected in advance from a tenant __________ 7. State income taxes owed at the end of the year __________ 8. Rent owed by a tenant but not yet collected

Explanation / Answer

Hi,

Please find the answer as follows:

1) AL

2) DR

3) AA

4) DE

5) DE

6) DR

7) AL

8) AA

Thanks.

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