Q18RQ - Horngren'S Financial And Managerial Accounting

Question

What are the two rules to remember about adjusting entries?

Step-by-Step Solution

Answer

Accrued revenue refers to the revenue earned but not collected from the customers. An example would be goods sold on account.

Step-by-Step Solution Step 1: Explanation of Revenue

Revenue refers to the income received from the customer by providing goods or services to the customers. 

Step 2: Treatment of Accrued Revenue

Accrued revenue is reported as revenue in the income statement and also reported as account receivable under the asset section of the balance sheet.