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15 February, 15:08

Classify the following items as (a) prepaid expense, (b) unearned revenue, (c) accrued revenue, or (d) accrued expense:

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  1. 15 February, 15:11
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    Answer & Explanation:

    a. Prepaid Expenses : These are expenses paid before the due date.

    Eg - April'19 rent already paid in March'19

    b. Unearned Income : These are revenues received before the due date. It is also called Advance Income

    Eg - March'19 commission already received in Feb'19.

    c. Accrued Revenue : These are revenue earned & due to be received, but still not received. It is also called Outstanding Income.

    Eg - March'19 commission earned revenue not received till March'19 end

    d. Accrued Expense : These are expenses due but not paid. It is also called Outstanding Expense.

    Eg - March'19 rent not paid till March'19 end
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