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State Whether Each Situation Is a Deferral or an Accrual

Question 168

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State whether each situation is a deferral or an accrual.

Premises:

Responses:

Depreciation on machinery is $7,200 for the accounting period.

Accural

Commissions amounting to $975 were earned but not yet collected by year end.

Deferral

Office supplies of $965 were on hand at the beginning of the period.Purchases of office supplies during the period totaled $640.At the end of the period,$120 in office supplies remained.

Interest that has been incurred on a loan but that has not yet been paid or recorded is $675.

Prepaid Rent had a $2,500 balance prior to adjustment.By year end,50 percent had expired.

Premises:

Depreciation on machinery is $7,200 for the accounting period.

Commissions amounting to $975 were earned but not yet collected by year end.

Office supplies of $965 were on hand at the beginning of the period.Purchases of office supplies during the period totaled $640.At the end of the period,$120 in office supplies remained.

Interest that has been incurred on a loan but that has not yet been paid or recorded is $675.

Prepaid Rent had a $2,500 balance prior to adjustment.By year end,50 percent had expired.

Responses:

Accural

Deferral

Correct Answer:

Premises:

Responses:

Depreciation on machinery is $7,200 for the accounting period.

Commissions amounting to $975 were earned but not yet collected by year end.

Office supplies of $965 were on hand at the beginning of the period.Purchases of office supplies during the period totaled $640.At the end of the period,$120 in office supplies remained.

Interest that has been incurred on a loan but that has not yet been paid or recorded is $675.

Prepaid Rent had a $2,500 balance prior to adjustment.By year end,50 percent had expired.

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