Adjustments which are necessary because cash for expenses is paid in advance or cash from income is pre-collected are called:
A) accruals.
B) deferrals/prepayments.
C) contras.
D) unrecorded adjustments.

Question

Quizplus · Accepted Answer

Adjustments made due to cash being paid in advance for expenses or cash from income being pre-collected are called deferrals or prepayments. Accruals refer to adjustments made for expenses incurred but not yet paid, contras refer to offsetting balances recorded in the financial statements, and unrecorded adjustments are adjustments that have not been previously recorded in the accounting records.

Adjustments Which Are Necessary Because Cash for Expenses Is Paid