Asked by Morris Mwendwa on May 20, 2024
Verified
A company performs 20 days of work on a 30-day contract before the end of the year.The total contract is valued at $6,000 and payment is not due until the contract is fully completed.The required adjusting entry includes a $4,000 debit to Unearned Revenue.
Unearned Revenue
Money received by a company for a service or product that has yet to be provided or delivered.
Adjusting Entry
An accounting entry made at the end of an accounting period to allocate income and expenditure to the correct period.
Total Contract
Refers to the complete agreement and its associated financial value in a contractual arrangement between parties.
- Recognize and log changes for advance payments and unearned revenue.
- Acknowledge the necessity of precise timing and identification in revenue and expense recognition.
Verified Answer
Learning Objectives
- Recognize and log changes for advance payments and unearned revenue.
- Acknowledge the necessity of precise timing and identification in revenue and expense recognition.
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