Paid six months of rental payments to the landlord.

A) Prepaid expense
B) Accrued expense
C) Unearned revenue
D) Accrued revenue
E) None of these choices

Learning Objectives

• Understand the concept of adjusting entries and why they are necessary in accrual basis accounting.
• Identify and classify different types of accounts that require adjustments, such as prepaid expenses, unearned revenues, accrued revenues, and accrued expenses.