Discuss what do we mean by the term deferred revenue

Assignment Help Accounting Basics
Reference no: EM131798478

When a customer pays in advance for a product or service such as a prepaid insurance policy, the business that sold the item will record the cash received as an asset and the future obligation to provide the item as a liability. Please give some thought to different business situations where the customers may pay in advance and provide an example here.

1. Using your example, which account is debited to record the payment received? Which account is credited?

2. When the business provides the product or service, which account is debited? Which account is credited?

3. What do we mean by the term "deferred revenue"?

4. How would these transactions be recorded under the cash basis of accounting? What are the benefits of recording the deferral under the accrual basis?

Reference no: EM131798478

Questions Cloud

What would you suggest the university do to expand revenue : What would you suggest the university do to expand revenue? How would you tackle this problem based on what you have learned in this course?
In how many years will the future value double : What function describes the future value at the end of n years? In how many years will the future value double?
Department of commerce reported : a. Plot the consumption series. Estimate the appropriate polynomial trend model to forecast consumption expenditure for the 1st quarter of 2011.
Find the point at which the demand is of unitary elasticity : Find the point at which the demand is of unitary elasticity and find intervals in which the demand is inelastic and in which it is elastic.
Discuss what do we mean by the term deferred revenue : When the business provides the product or service, which account is debited. Which account is credited
Construct the exponentially smoothed series : 1. Construct the exponentially smoothed series for fried dough and soft drinks using a = 0.30 and a = 0.70.
What function describes the temperature t of the object : If the temperature of the object is 70°F, and C = 210°F, what function describes the temperature T of the object t hours after it is moved?
Analyze the effect of political economy on trade agreements : Analyze the effect of the political economy on trade agreements and policy. Analyze the various countries to which U.S. actively trades or has an embargo upon.
What is your opinion of jasons reasoning why : If Jason underestimates the dollar amount of ending inventory, what effect will it have on net income for the current accounting period

Reviews

Write a Review

Accounting Basics Questions & Answers

  Compute the balance in the common stock account

At the time that EDF Company issued a 2 for 1 stock split, the company had 1,000 shares at $5 par value common stock outstanding.

  Question on journal entries-treasury stock

Gore Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2008, Gore reacquired 100 shares at $85 per share. On September 1, Gore reissued 60 shares at $90 per share.

  Leiker corporation has these accounts at december 31 common

leiker corporation has these accounts at december 31 common stock 11 par 4610 shares issued 50710 paid-in capital in

  Why do you think there is a fund of fund market

Why do you think there is a fund of fund market for hedge funds, but not for mutual funds?

  How should a compensating balance be reported

Define a "compensating balance." How should a compensating balance be reported?

  Financial performance for a recent fiscal period

Downhill Inc. sells, rents, and services ski equipment.Information about the company's financial performance for a recent fiscal period is provided below.

  What is the rationale for accounting for non expendable

What is the rationale for accounting for non expendable endowment funds on a full, rather than a modified, accrual basis? Why is it important that depreciation be charged on long-term assets held as fiduciary fund investments?

  Cash interest payment-interest expense

The following components are computed annually when a bond is issued for other than its face value:

  A summary of work completed with related unit and total

1.the basic types of cost accounting systems arejob order cost systems activity based cost systems and process cost

  Extreme sport inc uses the allowance method to account for

extreme sport inc. uses the allowance method to account for bad debts. during 2010 the company recorded 560000 in

  Research a case of accounts receivable fraud

Research a case of accounts receivable fraud. Discuss how the fraud took place and what internal controls could have prevented this case of fraud

  Problem regarding the maintenance costs

A limousine company is concerned with increasing costs of maintaining their fleet of 150 cars. After testing, the company found that the emissions systems of 7 out of the 22 cars they tested failed to meet pollution control guidelines.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd