Diego Consulting initially records prepaid and unearned items in income statement accounts. Given Diego Consultings accounting practices,
Question:
Diego Consulting initially records prepaid and unearned items in income statement accounts. Given Diego Consulting’s accounting practices, which of the following applies to the preparation of adjust¬
ing entries at the end of its first accounting period?
a. Earned but unbilled (and unrecorded) consulting fees are recorded with a debit to Unearned Consulting Fees and a credit to Consulting Fees Earned.
b. Unpaid salaries are recorded with a debit to Prepaid Salaries and a credit to Salaries Expense.
c. The cost of unused office supplies is recorded with a debit to Supplies Expense and a credit to Office Supplies.
d. Unearned fees (on which cash was received in advance earlier in the period) are recorded with a debit to Consulting Fees Earned and a credit to Unearned Consulting Fees. l01
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