Deferrals: Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred. Deferrals are classified into two types. They are prepaid expenses, and unearned revenues. Prepaid expenses: The expenses are paid in cash, before they are incurred. Unearned revenue: The cash is received, before the services are performed. The expense recognition principle: The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue, doesn’t matter, payment is made or not. To calculate: The amount of supplies purchased during the year.

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Answer 1

Question

Chapter 3, Problem 3.4EX

To determine

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

The expense recognition principle:

The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue, doesn’t matter, payment is made or not.

To calculate: The amount of supplies purchased during the year.

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Answer 2

Question

Chapter 3, Problem 3.4EX

To determine

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

The expense recognition principle:

The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue, doesn’t matter, payment is made or not.

To calculate: The amount of supplies purchased during the year.

Expert Solution & Answer

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Answer 3

Question

Chapter 3, Problem 3.4EX

To determine

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

The expense recognition principle:

The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue, doesn’t matter, payment is made or not.

To calculate: The amount of supplies purchased during the year.

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Answer 4

Question

Chapter 3, Problem 3.4EX

To determine

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

The expense recognition principle:

The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue, doesn’t matter, payment is made or not.

To calculate: The amount of supplies purchased during the year.

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Answer 5

Chapter 3, Problem 3.4EX

To determine

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

The expense recognition principle:

The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue, doesn’t matter, payment is made or not.

To calculate: The amount of supplies purchased during the year.

Answer 6

Chapter 3, Problem 3.4EX

To determine

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

The expense recognition principle:

The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue, doesn’t matter, payment is made or not.

To calculate: The amount of supplies purchased during the year.

Answer 7

Chapter 3, Problem 3.4EX

To determine

Deferrals:

Deferrals refer to the revenues that are collected in advance before the services are provided or sales are made to the customer, and the expenses are paid in advance before the expenses are incurred.

Deferrals are classified into two types. They are prepaid expenses, and unearned revenues.

Prepaid expenses: The expenses are paid in cash, before they are incurred.

Unearned revenue: The cash is received, before the services are performed.

The expense recognition principle:

The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue, doesn’t matter, payment is made or not.

To calculate: The amount of supplies purchased during the year.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Is the matching concept related to (a) the cash...Ch. 3 - Why are adjusting entries needed at the end of an...Ch. 3 - What is the difference between adjusting entries...Ch. 3 - Identify the four different categories of...Ch. 3 - If the effect of the debit portion of an adjusting...Ch. 3 - If the effect of the credit portion of an...Ch. 3 - Does every adjusting entry affect net income for...Ch. 3 - Prob. 9DQ Ch. 3 - (a) Explain the purpose of the two accounts:...

Solution Summary: The author explains the two types of deferrals: prepaid expenses and unearned revenues. The expense recognition principle refers to the expenses that should match with revenue in the period when the company incurred expenses.

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