Question: Diego Consulting initially records prepaid and unearned items in income statement accounts. Given this company's accounting practices, which of the following applies to the preparation of adjusting entries at the end of its first accounting period?
a. Earned but unbilled (and unrecorded) consulting fees are recorded with a debit to Unearned Consulting Fees and a credit to Consulting Fees Earned.
b. Unpaid salaries are recorded with a debit to Prepaid Salaries and a credit to Salaries Expense.
c. The cost of unused office supplies is recorded with a debit to Supplies Expense and a credit to Office Supplies.
d. Unearned fees (on which cash was received in advance earlier in the period) are recorded with a debit to Consulting Fees Earned and a credit to Unearned Consulting Fees.