Below is an example of a journal entry for three months of rent, paid in advance. In this transaction, the Prepaid Rent is increasing, and Cash is decreasing. DebitCreditUnearned Revenue$1,000Revenue$1,000Why is deferred revenue considered a liability? Because it is technically for goods or services still owed to your customers. Before the ...
Example of current liabilities include accounts payable, short-term notes payable, commercial paper, trade notes payable, and other liabilities incurred in the normal operations of the business. Some of these normal operating costs include salaries payable, wages payable, interest payable, income tax payable, and the current balance of a ...
If you don’t have a lot of bad debts, you’ll probably write them off on a case-by-case basis, once it becomes clear that a customer can’t or won’t pay. Accounting Accounting software helps manage payable and receivable accounts, general ledgers, payroll and other accounting activities. Calculate bad debt expense and ...
Recreate journal entries to measure the effect on ledger accounts where several cash transactions have occurred. It would appear as investing activity because purchase of equipment impacts noncurrent assets. A company thinks is appropriate, the impact of the financing decisions will flow through the cash flow statement. If the building is ...
Since the company uses straight-line amortization, we will record the same amount of amortization each time interest is paid. The amount of cash is based on the face rate of the bond. Because the bond purchasers paid extra for the bond, the company more money than the face value of the bond. That additional cash helps to offset the amount the ...
Since they say ‘Cash is King’ and you need it to survive, getting money in your pocket sooner will behoove you as you will be able to keep your cash flow positive. Unearned revenue is very beneficial to many companies and suppliers because of several reasons. Below are three main ways a small business can […]