Similarly, GAAP rules prevent businesses from recognizing unearned revenue as fully recognized income. It is to prevent businesses from overvaluation of income and avoid manipulation of accounting practices to window-dress profits. Recognition of unearned revenue immediately as a liability is in compliance with the GAAP rules and accrual accounting principles. Therefore, the seller records it …
Expenses are what a company must pay to run its operations and generate revenue. Interest expenses are costs incurred on borrowed funds, such as loans or credit. Prepaid expenses are costs paid in advance but will be recognized as expenses over time or when the related benefits are consumed. Cost Reduction Strategies One of the …
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