Accounting help (1 Viewer)

mmmm.

Active Member
Joined
Dec 18, 2019
Messages
286
Gender
Male
HSC
2020
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

The pessimistic optimist.
Moderator
Joined
Jul 11, 2012
Messages
11,592
Location
l'appel du vide
Gender
Undisclosed
HSC
2014
Uni Grad
2018
Currently, it looks like the question is incomplete?

Do you have more parts to the question?
 

mmmm.

Active Member
Joined
Dec 18, 2019
Messages
286
Gender
Male
HSC
2020
Currently, it looks like the question is incomplete?

Do you have more parts to the question?
Screen Shot 2021-04-20 at 4.27.40 pm.png
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

New Member
Joined
Oct 27, 2018
Messages
20
Gender
Male
HSC
2020
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

Le Phénix Trilingue
Moderator
Joined
Aug 22, 2019
Messages
4,116
Location
Krak des Chevaliers
Gender
Male
HSC
2019
Uni Grad
2022
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.

unnamed (1).png

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

seremify007

Junior Member
Joined
Apr 29, 2004
Messages
10,049
Location
Sydney, Australia
Gender
Male
HSC
2005
Uni Grad
2009
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.
 

Users Who Are Viewing This Thread (Users: 0, Guests: 1)

Top