Final answer:
The correct answer is b. Cash Uneamed revenue. Adjusting entries are made at the end of an accounting period to ensure that the financial statements accurately reflect the current financial position and results of operations of a company. Option b
Step-by-step explanation:
The correct answer is b. Cash Unearned revenue. Adjusting entries are made at the end of an accounting period to ensure that the financial statements accurately reflect the current financial position and results of operations of a company. These entries involve recognizing revenue or expenses that have not yet been recorded, as well as allocating costs and revenues over the appropriate time period.
Prepaid rent Rent expense is an example of an adjusting entry. In this case, at the end of the accounting period, the prepaid rent account is reduced and the rent expense account is increased to reflect the portion of rent that has been used up during the period.
Similarly, interest expense and interest payable are examples of adjusting entries. At the end of the accounting period, the interest expense account is increased and the interest payable account is also increased to reflect the interest that has been incurred but not yet paid.
On the other hand, cash unearned revenue does not involve recognizing revenue or expenses. Unearned revenue is a liability account that represents the receipt of cash from a customer for goods or services that have not yet been provided. When the goods or services are provided, the unearned revenue is reduced and revenue is recognized. Option b