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Expenses paid in advance require what type of adjusting entry?

1. Accrual

2. Deferral

3. Other 

 

Accounting Financial Reporting Financial Accounting Accounting and Finance
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Question added by Mehboob Ali Laghari , Social Mobilization Team Incharge , TRDP-European Union
Date Posted: 2015/08/08
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Muhammad Adil
by Muhammad Adil , Manager Accounts , Gul Ahmed CG Limited

When expenses have incurred and have to pay it will be recorded as accrued expenses. When expenses not incurred and paid in advance, it will be treated as your current asset and would be accounted for on deferral basis.

Ahmed Abdi Mahad
by Ahmed Abdi Mahad , Director of Internal Auditing Directorate , Jigjiga University

Deferred expense is deferred asset and accrued expense is accrued liability. So, expense paid in advance is deferred asset. So, choice #2, deferral is the answer for this question.

Deleted user

2. Deferral ..,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

Imdad Hussain Rajput
by Imdad Hussain Rajput , Assistant Sales Manager , Forego

Deferral.........................................................

Said Shaban
by Said Shaban , Accountant , Tri State Materials Testing

The correct answer is:  2- Deferral

Cash paid before expense is incurred: Deferred expense .

 

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