Type of adjustment

Question

Classify the following items as (1) accrued revenue, (2) accrued expense, (3) unearned revenue, or (4) prepaid expense:

Line Item Description Classification
a. Cash paid for future rent of office space
b. Fees received for future services to be performed
c. Wages owed but not yet paid
d. Services rendered for cash to be received

Answer 1

Here are the classifications for each of the line item descriptions:

a. Cash paid for future rent of office space
Classification: (4) prepaid expense

b. Fees received for future services to be performed
Classification: (3) unearned revenue

c. Wages owed but not yet paid
Classification: (2) accrued expense

d. Services rendered for cash to be received
Classification: (1) accrued revenue