In order to close revenue accounts, the revenue account must be debited.

Current liabilities are the short-term liabilities. It means that the company has to pay the liability either with cash of by handling goods or services within one year or in an operating cycle.

At the end of each accounting period, companies present their financial statements in order to communicate with information users. To present the company’s true and fair situation all accounts must be updated because recording some revenue and expense transactions are omitted during the period. That means some accounts must be adjusted, and some adjusting entries must be made.

Assets are economic resources that provide a future benefit for a business –something the business
owns. Most firms use the following asset accounts:
• Cash 
• Accounts Receivable

• Notes Receivable
• Prepaid Expenses. 
• Land 
• Buildings
• Equipment, Furniture, and Fixtures.

Companies might pay certain expenses in advance, such as insurance and rent. A prepaid expense is considered as an asset because the prepayment provides a future benefit for the business. Prepaid Rent, Prepaid Insurance, and Supplies are examples of prepaid expenses.

If cash is received in advance (before revenue is earned), a liability account (called as deferred revenue) will be used as a correspondence to cash account, a liability account called deferred revenue is used as a correspondence to cash account.

The accounting equation provides the analytical framework that we use throughout this book to understand the effects of transactions and events on the financial statements. This equation requires that a company’s assets exactly balance, or offset, an equal amount of financing provided by creditors and owners of the corporation. Each transaction must affect two or more accounts to keep the basic accounting equation in balance. In other words, for each transaction, one or more accounts must be debited, or entered on the left side of the account, and one or more accounts must be credited, or entered on the right side of the account, and the total monetary amount of the debits must equal the total dollar amount of the credits. The equality of debits and credits provides the basis for the double-entry system of recording transactions. Under double-entry system, debit and credit procedure is used to keep the accounting equation in balance by using appropriate accounts instead of using plus and minus procedure.

Assets= Liabilities + Owner's Equity

The most typical liability accounts:

Accounts Payable. The Accounts Payable account is the opposite of Accounts Receivable. A or The company promises to pay a debt in the future. Arises from a credit purchase.

Notes Payable. A note payable is the opposite of a Note Receivable. The Notes Payable account includes the amounts the company must pay because the company signed a written promise to pay a debt amount in the future. Notes payable, like notes receivable, usually involves interest.

Unearned Revenue (Advances from customers). The obligation occurs when a company receives cash from a customer in advance but has not provided the product or service. The company gives promise to provide services or deliver goods in the future.

Accrued Liabilities. An accrued liability is a liability for an expense you have not yet paid. In another words, an amount owed but not paid yet. Interest Payable, Salary Payable, and Income Tax Payable are typical accrued liability accounts for most companies.

The correct answer is D.

Companies might pay certain expenses in advance, such as insurance and rent. A prepaid expense is considered as an asset because the prepayment provides a future benefit for the business. Prepaid Rent, Prepaid Insurance, and Supplies are examples of prepaid expenses.

Dept account represents a company's obligation to pay off a short-term debt to its creditors or suppliers. It appears on the balance sheet under the current liabilities.

Rent, interest, insurance, etc. are the examples of prepaid expenses.

Assets = Liabilities + Owner’s equity

The relevance of fair value and necessity of faithful representation are the main factors used in determining which measurement principle to apply. Relevance refers the impact capacity of financial information generated by an accounting system on the decisions of information users. Therefore, relevance also contains materiality concept which is the universally accepted accounting principle that all material matters are to be disclosed.

The fair value principle, on the other hand,  states that assets and liabilities are reported at their fair value. The historical cost principle states that assets are recorded at their cost.

A ledger  

The historical cost principle states that assets are recorded at their cost.The fair value principle states that assets and liabilities are reported at their fair value. Relevance refers the impact capacity of financial information on the decisions of information users.Relevance also contains materiality concept which is the universally accepted accounting principle that all material matters are to be disclosed. Faithful representation means that the numbers and disclosures match what really existed or happened.

Transferring the balances of the revenue and expense accounts to Income summary account, and transferring Income Summary account’s balance to Capital account are called the “Closing Entries”. The accounts which are closed at the end of the term are called “temporary accounts” because they hold only one period’s transactions and they have to be zeroed for the next period.

Accounting is based on either the cash basis or the accrual basis.