Adjusting entries involve

one real and one nominal account

An unearned revenue can be best described as an amount

collected and not currently matched with expenses

not collected and not currently matched with expenses

collected and currently matched with expenses

not collected and currently matched with expenses

What is the last step in the accounting cycle considering the following?

Prepare a post-closing trial balance

Journalize and post adjusting entries

Journalize and post closing entries

After the accounts have been closed

The revenue, expense, and income summary accounts have zero balances

All the accounts have zero balances

The asset, liability, and shareholder's equity accounts have zero balances

The revenue, expense, income summary, and retained earnings accounts have zero balances

An entity must make adjusting entries

To ensure that revenue recognition and expense recognition principles are allowed

Each time it prepares financial statements

To account for accruals and defferals

A prepaid expense can be best described as an amount

Paid and not currently matched with earnings

Paid and currently matched with earnings

Not paid and currently matched with earnings

Not paid and not currently matched with earnings

ACCOUNTING FOR SERVICE BUSINESS

Initially the recording and communicating of economic events occurred through narratives in early civilisation. As businesses grew in size there became a need to record the procedures. In 1494, Luco Pacioli, an Italian, described the double entry system of debit and credit to be recorded in journals and ledgers. The Italians were the first bankers however accounting can be traced from the Greeks and Romans in the 4th and 5th century BC who were traders. The system has remained the same. The initial stewardship role of securing cash developed into a system of accounting which involves recording, summarizing and analysing data to ensure the efficient operation of the business currently known as financial accounting. Formerly, the data only reflected receipts and payments of cash. Today the practice is to match income earned with expenses incurred. Later on cost management was identified as a tool to help managers in making business decisions. Other services now include taxation etc. In the quest for consistency in record and presentation, the profession has developed and instituted organised rule making authorities including the International Accounting Standards Board (IASB). They create generally accepted accounting principles (GAAP) and concepts. They are established principles, standards, and legislation unique to each jurisdiction. The profession now requires accreditation and certification given the complexity involved in the record and presentation of accounts and statements.

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