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QLDAccountingQuick questions
Unit 3: Managing resources for a trading GST business
Quick questions on Balance day adjustments in QCE Accounting Unit 3
4short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is prepaid expense?Show answer
The business has paid for something it has not yet fully used, such as insurance paid 12 months in advance. The unused portion is an asset. Adjustment: debit Prepaid Expense (current asset), credit the expense.
What is accrued expense?Show answer
The business has used something it has not yet paid for, such as wages owing at year end. Adjustment: debit the expense, credit Accrued Expense (current liability). This increases the expense to include what was incurred but unpaid.
What is accrued revenue?Show answer
The business has earned revenue it has not yet received, such as interest earned but not yet credited. Adjustment: debit Accrued Revenue (current asset), credit the revenue. This increases revenue to include what was earned but uncollected.
What is unearned revenue?Show answer
The business has received cash for something it has not yet delivered, such as a deposit for goods to be supplied next period. The unearned portion is a liability. Adjustment: debit the revenue, credit Unearned Revenue (current liability).
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