Which one of the following statements related to accounting for prepaids and acc

Question

Which one of the following statements related to accounting for prepaids and accruals is not accurate?

"Deferred income" and "Unearned revenue" are two terms that basically mean the same thing.
Deferred income is created when a company receives cash prior to earning the related income.
When a one-year insurance policy is fully paid for at the beginning of the year, it creates unearned revenue for one company and prepaid expense for the other.
"Accrued expenses" and "Prepaid expenses" are basically the same thing.

Explanation / Answer

Hi,

Option D ("Accrued expenses" and "Prepaid expenses" are basically the same thing.) is the correct answer.

Thanks.

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