required: identify each of the following events as an accrual, a deferral, or neither.\nevents\ttype of…

required: identify each of the following events as an accrual, a deferral, or neither.\nevents\ttype of accounting\na. paid cash in advance for a one - year insurance policy.\taccrual\n b. paid cash to settle an account payable.\taccrual\n c. collected accounts receivable.\tneither\n d. paid cash for current salaries expense.\tdeferral\n e. paid cash to purchase supplies.\tneither\n f. provided services on account.\tdeferral\n g. provided services and collected cash.\taccrual\n h. paid cash to purchase land.\tdeferral\n i. recognized accrued salaries at the end of the accounting period.\tneither\n j. paid a cash dividend to the stockholders.\taccrual\n k. recognized revenue on account at the end of the period.\taccrual\n l. collected cash for services to be provided in the future.

required: identify each of the following events as an accrual, a deferral, or neither.\nevents\ttype of accounting\na. paid cash in advance for a one - year insurance policy.\taccrual\n b. paid cash to settle an account payable.\taccrual\n c. collected accounts receivable.\tneither\n d. paid cash for current salaries expense.\tdeferral\n e. paid cash to purchase supplies.\tneither\n f. provided services on account.\tdeferral\n g. provided services and collected cash.\taccrual\n h. paid cash to purchase land.\tdeferral\n i. recognized accrued salaries at the end of the accounting period.\tneither\n j. paid a cash dividend to the stockholders.\taccrual\n k. recognized revenue on account at the end of the period.\taccrual\n l. collected cash for services to be provided in the future.

Answer

Brief Explanations:

  • a. Deferral: Pre - paid insurance is a deferral as cash is paid in advance for a future benefit.
  • b. Neither: Paying accounts payable is a simple settlement of a liability, not an accrual or deferral.
  • c. Neither: Collecting accounts receivable is just converting an asset from accounts receivable to cash, not an accrual or deferral.
  • d. Neither: Paying current salaries expense is a normal cash - out for current services, not an accrual or deferral.
  • e. Deferral: Purchasing supplies in cash creates a prepaid asset (a deferral) as the supplies will be used in the future.
  • f. Accrual: Providing services on account creates an accounts receivable and recognizes revenue before cash is received, an accrual.
  • g. Neither: Providing services and collecting cash is a straightforward cash - based revenue recognition, not an accrual or deferral.
  • h. Neither: Buying land for cash is an asset - acquisition transaction, not an accrual or deferral.
  • i. Accrual: Recognizing accrued salaries at the end of the period records an expense and a liability for work done but not yet paid, an accrual.
  • j. Neither: Paying a cash dividend is a distribution of earnings, not an accrual or deferral.
  • k. Accrual: Recognizing revenue on account at the end of the period is an accrual as revenue is earned but cash is not yet received.
  • l. Deferral: Collecting cash for future services creates a liability (unearned revenue), a deferral.

Answer:

a. Deferral b. Neither c. Neither d. Neither e. Deferral f. Accrual g. Neither h. Neither i. Accrual j. Neither k. Accrual l. Deferral