5. Which of the following journal entries is used to record a deferral? A. Inter
ID: 2576631 • Letter: 5
Question
5.
Which of the following journal entries is used to record a deferral?
A.
Interest expense
xxx
Interest payable
xxx
B.
Accounts receivable
xxx
Service revenue
xxx
C.
Wages expense
xxx
Wages payable
xxx
D.
Cash
xxx
Unearned revenue
xxx
5.
Which of the following journal entries is used to record a deferral?
A.
Interest expense
xxx
Interest payable
xxx
B.
Accounts receivable
xxx
Service revenue
xxx
C.
Wages expense
xxx
Wages payable
xxx
D.
Cash
xxx
Unearned revenue
xxx
5.
Which of the following journal entries is used to record a deferral?
A.
Interest expense
xxx
Interest payable
xxx
B.
Accounts receivable
xxx
Service revenue
xxx
C.
Wages expense
xxx
Wages payable
xxx
D.
Cash
xxx
Unearned revenue
xxx
Explanation / Answer
Option D is correct, that is Cash debited and unearned revenue credited
Since unearned revenue is the revenue which is received before it is actually earned , hence it is not recognized as a current period revenue and it is deferred for the period when it is earned or service is provided, hence it is deffered journal entry is needed, when there is receipt of cash in advance, it is credited to the liabilty account called unearned revenue and when service or sale is provided then the revenue is recognised by debiting the unearned revenue account
hence option D is correct
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