The Yellow Canoe Company made year-end adjusting entries affecting each of the following accounts: Interest Revenue credited); Depreciation Expense debited); Unearned Rental Revenue debited); and Prepaid Insurance credited). Which account is likely to appear in Yellow Canoe's reversing entries?

Question

Quizplus · Accepted Answer

Reversing entries are typically made for accrued incomes and expenses that have been recorded but not yet realized. Interest Revenue fits this description, as it is often accrued before it is actually received, making it a common account for reversing entries. Depreciation Expense and Prepaid Insurance are not typically reversed because they relate to the allocation of costs over time and the consumption of benefits, respectively, rather than accruals.

The Yellow Canoe Company Made Year-End Adjusting Entries Affecting Each