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Chapter 2 - E1 & E6 excercises

Chapter 2 - E1 & E6 excercises - 4 Unearned...

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E1 1. To determine when a business transaction should be recorded. Recognition is when the company took ownership of the product or services. Valuation is to determine the monetary value of a business transaction with its historical cost and classification to assign the business transaction to the proper category or account. 2. To record receipt of a business transaction based on a contract or document and the actual funds have not yet been received by the company. 3. Assets represents a cost that will benefit the company in the future, and an expense will immediately affect the firms earnings. The debit and credit effects for assets and expenses the same because they are both debits for these two areas.
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Unformatted text preview: 4. Unearned revenues have yet to become an asset to the company until the funds are received, while prepaid expenses have an immediate impact on the liabilities of the company. E6 Debit Credit Cash X Wages Expense X Accounts Receivable X Common Stock X Service Revenue X Prepaid Rent X Accounts Payable X Investments in Securities X Income Taxes Payable X Income Taxes Expense X Land X Supplies Expense X Prepaid Insurance X Utilities Expenses X Fees Earned X Dividends X Wages Payable X Unearned Revenue X Office Equipment X Rent Payable X Notes Receivable X Interest Expenses X Notes Payable X Supplies X Interest Receivable X Rent Expense X...
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