How and why do we accrue the expenses, deferred revenue and reconciliation related questions.

Question

Accepted Answer

Accruing expenses, deferred revenue, and reconciliation are important for accurate financial reporting.

Accruing expenses involves recognizing expenses that have been incurred but not yet paid.
Deferred revenue is recognized when payment has been received but the revenue has not yet been earned.
Reconciliation ensures that the financial records are accurate and match with external sources.
Accruing expenses and deferred revenue help in matching expenses and revenue to the correct accounting period.
Reconciliation helps identify any discrepancies or errors in the financial statements.
Accruing expenses and deferred revenue are necessary for the accrual basis of accounting.
Examples of accrued expenses include salaries, interest, and utilities.
Examples of deferred revenue include prepaid subscriptions or advance payments for services.
Reconciliation questions may involve comparing bank statements with cash records or verifying accounts receivable balances.

Accepted Answer

Always give answer based on your work experience with an example of journal entry and also be prepared for counter questions from the interviewers.

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