32 - totaling $5,000 • The revenue has not yet been...

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Depreciation Example A company purchases equipment for $50,000 The estimated useful life of the equipment is five years Accrued Expenses Expense incurred before cash is paid Result in a liability Common accrued expenses: Salaries Interest Taxes Accrued Salary Expense Example A company pays its employees a weekly salary each Friday Salaries for each week total $10,000 December 31, the company’s year-end, falls on a Wednesday Accrued Revenues Companies often earn revenue before cash is received Results in an accrued revenue Receivable recorded Accrued Revenue Example A company performed services for customers during the last week of the year
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Unformatted text preview: totaling $5,000 • The revenue has not yet been recorded because the customers won’t be billed until January Unearned Revenues • Recorded as a liability when company receives payment Company owes customer product or service • Revenue is not recorded until earned When company provides product or service • An adjusting entry is made to transfer amount from unearned revenue to revenue Unearned Revenue Example • On November 1, a company receives a customer payment of $18,000 for services to be performed during the next three months...
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This note was uploaded on 06/14/2011 for the course ACCOUNTING 23020 taught by Professor Na during the Spring '11 term at Kent State.

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