. As of November 30 none of the $2,400 cost has expired and the entire $2,400 will be reported on the balance sheet as Prepaid Insurance or Prepaid Expenses. On December 31, an adjusting entry will debit Insurance...
. As of November 30 none of the $2,400 cost has expired and the entire $2,400 will be reported on the balance sheet as Prepaid Insurance or Prepaid Expenses. On December 31, an adjusting entry will debit Insurance...
be the case under the allowance method. [The Internal Revenue Service requires the direct write off method in order to prevent taxpayers from claiming a bad debts expenses based on an anticipated potential loss.] Join...
) and expenses and losses when they occur (not when money is paid out). The cash flow statement concludes by showing that its amounts agree to the change in the company’s cash and cash equivalents from the beginning to...
, the $850 of revenues minus the related expenses results in the amount of net income. Effect from Collecting an Account Receivable Assume that on January 8, HRS receives the $850 from the customer whose furnace was...
be reported. The negative net income occurs when the current year’s revenues are less than the current year’s expenses. If the cumulative earnings minus the cumulative dividends declared result in a negative...
at its cost of $15,000 Report the inventory at its net realizable value (NRV) of $12,000. (NRV is equal to the estimated sales value of $14,000 minus $2,000 of expenses necessary to get the goods sold for $14,000.) The...
that was in inventory at a cost of $30,000, the company’s current assets will increase by $20,000. If no other expenses are incurred, working capital will increase by $20,000. If a company borrows $50,000 and agrees...
, and prepaid expenses. Evaluating Liquidity Liquidity depends on 1) the speed at which the assets should be turning to cash, or 2) the assets’ nearness to cash. For example, some temporary investments are marketable...
Adding the increase in accrued expenses payable Example of the Direct Method of SCF When the direct method of presenting a corporation’s cash flows from operating activities is used, the amount of net income is not...
as a current liability such as Accrued Expenses Payable. On the corporation’s income statements, the interest that occurred (whether paid or not paid) during the period of the income statement will be reported as...
owner’s equity increases. When the company pays cash for an advertisement expense, its assets decrease and its owner’s equity decreases. In accounting and bookkeeping there is a separate financial statement known as...
will include preparing the following projections for the next accounting year: Amounts for sales Amounts for producing goods Amounts for each department’s expenses Summarizing the above budgets into a master budget or...
. The journal entry to record depreciation is recorded in the __________ journal. 4. The entries recorded in the general journal are also posted to accounts in the __________ __________. 5. A listing of the names and...
Statement Wrong. Statement Of Cash Flows Wrong. Statement Of Comprehensive Income Wrong. Statement Of Stockholders’ Equity Wrong. 8. Is it true or false that a grocery store’s sale of its old delivery van to one of...
Our Explanation of Inventory and Cost of Goods Sold will take your understanding to a new level. You will see how the income statement and balance sheet amounts are affected by the various inventory systems and cost flow...
in several general ledger accounts. One of the accounts is sometimes described as Stores. Which of the following inventories would be in the Stores account? Materials Right! Work-in-Process Wrong. Finished Goods Wrong....
Our Explanation of Stockholders' Equity covers the unique terminology for a corporation's paid-in capital, retained earnings, treasury stock, and accumulated other comprehensive income. Included are cash dividends, stock...
Our Explanation of Evaluating Business Investments compares four of the techniques for reviewing potential capital expenditures. You will be introduced to accounting rate of return, payback, net present value, and...
by $4,000. Since both sides of the accounting equation increase by $4,000, the accounting equation remains in balance: Expenses Decrease Owner’s Equity and Affects Another Account Owner’s equity will decrease when a...
Since our Explanation of Cash Flow Statement illustrates how the amounts are determined, you will get a better understanding of this very important financial statement. No longer will you look at only the income...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
by $50,000 during the year and revenues amounted to $125,000, what were the expenses for the year? Select... $75,000.00 $175,000.00 29. During the year a sole proprietorship’s assets increased by $25,000 while its...
the income statement reports revenues earned (not cash receipts) and expenses incurred (not cash payments). Since many investors and financial analysts believe that “cash is king” the annual cash flow statement is...
Our Explanation of Financial Statements provides you with the highlights of each of the five external financial statements issued by U.S. corporations. Our insights will give you a good understanding of what the...
reporting at cost is the general rule, inventories must be reported at less than cost in certain situations. For example, some inventories will have to be reported at their net realizable value when it is less than...
What causes a reduction in Accumulated Depreciation? Definition of Accumulated Depreciation Accumulated Depreciation is a general ledger contra asset account associated with a company’s property, plant and equipment....
for the actual goods produced. If the actual quantity of the materials used was more than the standard quantity allowed for the good output, the materials usage variance is unfavorable and the general ledger account...
purchase, the corporation’s general ledger accounts will have a debit balance of $200,000 in the current asset account Cash, a debit balance of $100,000 in the noncurrent asset account Land, a debit balance of...
international general standards to provide assurance of the __________ in processes and products. 4. MRP is the acronym for material requirements __________. 5. One of the primary inputs for an MRP system is each...
Will every transaction affect an income statement account and a balance sheet account? Definition of Income Statement and Balance Sheet Accounts A company’s general ledger accounts are arranged into two categories...
to the company’s balance sheet where it will be reported as a liability. The title of the general ledger liability account may have the title of Unearned Revenues, Deferred Revenues, or Customer Deposits. As the...
proof is $30,000 of sales + $2,100 of sales tax = $32,100. In general journal form the accounting entry to record this information is: debit Cash $32,100; credit Sales $30,000; credit Sales Tax Payable $2,100. Join PRO...
at the bank. Taking advantage of this time delay, but not overdrawing the bank account balance is referred to as playing the float. Example of Overdraft Assume that on May 27, a company’s checking account has a bank...
basis, such as $50,000 per year. Many employees working in a company’s general office will be paid a salary. Often the salaries are paid semi-monthly. That is, one pay date will be the 15th day of the month for...
accounting __________ principles. 15. The profitability of a company for a specified period of time is reported on the __________ income statement. 16. The main components or elements of the income statement are...
account and its bank statement is documented in the __________ reconciliation of the bank statement. 15. Accrued expenses are likely to pertain to transactions that have __________ been paid. Already Wrong. Not Yet...
Investment center 16. Responsible for revenues and expenses, but not investments. Select... Cost center Revenue center Profit center Investment center 17. Often a department or part of a department. Select... Cost...
. Of course we had to estimate utilities and supplies used during the seven-day period, but we also had to estimate those expenses when we prepared monthly financial statements. Not only did we adopt weekly financial...
a huge backlog of orders for the product. Every hour that the machine is running, your company is able to generate sales of $500 while incurring incremental costs and expenses of $200. As a result, your company’s...
, perhaps on the 20th day of the month (for electricity used through the 15th day of the month). The cost of the electricity used during the last half of the month must get into the accounting records through an...
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