. Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry...
. Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for
A. Unearned revenue
B. Prepaid expense *correct
C. Accrued revenue
D. Accrued expense
Please explain why B is correct
Homework Answers
Answer: B. Prepaid expense
For Prepaid Expense adjusting entry
Expense a/c Dr.
To Prepaid Expense
For Depreciation adjusting entry
Depreciation expense a/c Dr.
To Accumulated Depreciation
In both the cases Asset is created by making payment upfront which is charged to the Revenues with passage of time or through use and consumption .
Incase of Unearned Revenue Liability is created which is considered revenue as and when services are performed
Incase of Accrued revenue cash is yet to be received and Accrued expense no asset is created.
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