Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense:
a. Cash received for services not yet rendered.
b. Insurance paid for the next year.
c. Interest revenue earned but not received.
d. Salaries owed but not yet paid.
Answer:
a. (2) Unearned revenue
b. (1) Prepaid expense
c. (3) Accrued revenue
d. (4) Accrued expense