Accounting 1 Help!

1. An accountant records a transaction when cash is paid or received under which basis of accounting?
cash
deferred
accrual
liability
2. When unearned revenue is initially recorded as a revenue, the adjusting entry would include a
credit to a liability.
debit to a liability.
debit to an asset.
credit to revenue.
3. A principle used to record revenue when it is earned is the
matching principle
revenue principle
timing principle
current principle
4. The balance in prepaid rent after adjustment represents
a liability on the balance sheet.
an expense on the income statement
revenue on the income statement
an asset on the balance sheet.

1. Cash

2. Debit to a liability
3. Revenue principle
4. An asset on the balance sheet

1. The accountant records a transaction when cash is paid or received under the cash basis of accounting.

To understand why, we need to know the basics of different accounting methods. The cash basis of accounting recognizes transactions when cash is actually received or paid. It focuses on the actual movement of cash, making it a simple and straightforward method. However, it does not take into consideration other factors such as when revenue is earned or expenses are incurred.

2. When unearned revenue is initially recorded as a revenue, the adjusting entry would include a credit to a liability.

To determine the correct entry, we need to know what unearned revenue is. Unearned revenue refers to payment that has been received in advance for goods or services that haven't been provided yet. Initially, when the payment is received, it is recorded as a liability on the balance sheet because the company has an obligation to deliver the goods or services. Therefore, the adjusting entry would include a credit to the liability account to decrease the unearned revenue balance.

3. The principle used to record revenue when it is earned is the revenue principle.

The revenue principle, also known as the realization principle, states that revenue should be recognized when it is earned, regardless of when the cash is received. In other words, revenue is recognized when the company has performed the necessary actions to earn that revenue, such as delivering goods or services to customers. This principle ensures that revenue is recorded in the correct accounting period, even if the cash hasn't been received yet.

4. The balance in prepaid rent after adjustment represents an asset on the balance sheet.

Prepaid rent refers to rent that has been paid in advance for a future period of time. It is considered an asset because the company has already made the payment, and it can benefit from the prepaid rent in the future. After making the adjusting entry to recognize the portion of prepaid rent that has been used up during the accounting period, the remaining balance represents the asset on the balance sheet.

1. An accountant records a transaction when cash is paid or received under the basis of accounting called "cash basis." This means that transactions are recorded when actual cash is either paid or received.

2. When unearned revenue is initially recorded as a revenue, the adjusting entry would include a credit to a liability. This is because unearned revenue represents a liability to the company until the goods or services are provided to the customer.

3. A principle used to record revenue when it is earned is the "revenue principle." This principle states that revenue should be recorded when it is earned, regardless of when cash is received. This means that revenue is recognized when goods or services are provided to customers.

4. The balance in prepaid rent after adjustment represents an asset on the balance sheet. Prepaid rent is an advance payment made by a company for rent expenses in the future. Since it represents a future economic benefit, it is considered an asset on the balance sheet until it is used up and recognized as an expense on the income statement.