What are the various types of adjusting entries? Types of Adjusting Entries Adjusting entries, which are required in order to have a company’s financial statements comply with the accrual method of accounting, are...
What are the various types of adjusting entries? Types of Adjusting Entries Adjusting entries, which are required in order to have a company’s financial statements comply with the accrual method of accounting, are...
direct materials, direct labor, and manufacturing overhead. Manufacturers are also required to consistently follow their selected cost flow assumption. Examples of Inventory Valuation Assume that a new company purchased...
. The entry to write off the bad account under the direct write-off method is: Debit Bad Debts Expense (to report the amount of the loss on the company’s income statement) Credit Accounts Receivable (to remove the...
is based on the employee’s wages, salary, commissions, bonuses, etc. Definition of FICA Matching In addition, the employer is required to match the following amounts that were withheld from the employees’ paychecks:...
What are the limitations of the balance sheet? Definition of Balance Sheet The balance sheet is one of the main required financial statements. It is also known as the statement of financial position. The balance sheet...
is the minimum number of accounts required to record a transaction; however, many transactions involve more than two accounts. 5. In addition to the standard chart of accounts for a specific industry, you will likely...
—as required by generally accepted accounting principles (GAAP)—and the profit that would have been reported if replacement cost had been used. For example, Company X sells products that are petroleum based. The...
the recording of the transactions, an accountant or the business owner will review the bookkeeper’s work and make the required adjusting entries before the company’s financial statements are distributed. (Larger...
variance accounts. For external financial reporting, the variances must be allocated to the inventories and the cost of goods sold. Definition of GAAP GAAP is the acronym for the phrase generally accepted accounting...
four treatments are provided. Example #2 of Unearned Income A company informs a new customer that a $5,000 deposit is required before it will begin work on the customer’s special order. The customer gives the company...
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
payment would be equivalent to an annual interest rate of Select... 6% 12% 24% 36% 25. Under the allowance method, the recovery of a previously written-off accounts receivable will include a debit to which account?...
Our Explanation of Future Value of a Single Amount will show you the power of compounded interest on a single deposit. You will see how the future value tables can be useful as well as the rule of 72.
Our Explanation of Improving Profits will assist you in focusing on the costs and revenues that are relevant (and ignoring those which are not relevant) for improving profits and eliminating losses. Examples of the...
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.
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
of stockholders’ equity, which is one of the five required external financial statements. Paid-in Capital or Contributed Capital Paid-in capital or contributed capital is the first component listed in the...
, a company may be required to report an expense on its income statement before receiving an invoice from the vendor. Select... True False 30. When a company defers an amount presently recorded in an expense account, the...
to receive if the buyer pays on June 8? $692 Wrong. $693 Right! $800 minus $100 = $700 minus 1% of $700 = $693. $700 Wrong. $792 Wrong. 4. With credit terms of 2/10, n/30, the annual interest rate for paying...
are required by the __________ principle. 6. The adjusting entry for depreciation will include a debit to Depreciation Expense and a credit to __________ __________. 7. Adjusting entries help to convert accounting...
volume, the resulting line would not be a straight line. Perhaps the line will curve upward thereby revealing that some variable expenses may be increasing exponentially instead of increasing at a constant rate. Fixed...
hours alone will be too low in relationship to the true cost of manufacturing this product. Another product might require many machine hours but no other activities. This product’s cost will be overstated because the...
, the depreciation could be allocated to the products using the Finishing Department’s equipment at the rate of $10 per hour ($60,000/6,000 hours). If the basic version of the product requires 1 hour, each basic...
plan, a deferred profit sharing plan, and/or a charitable giving plan may require an expense of 25% of its pretax profits. In addition, a U.S. corporation might have a combined federal and state income tax rate of...
interest rate. The corporation will record the transaction with a credit to the liability account Bonds Payable for $2,000,000, a credit to the related adjunct liability account Premium on Bonds Payable for $100,000,...
Medicare tax is withheld from an employee’s gross pay without limit at the rate of 1.45% of gross pay. In our example, Sam’s regular Medicare tax for the year is $4,350 ($300,000 X 0.0145). Jones Corporation must...
pays $100,000 in interest to its lenders. The $100,000 will appear on the corporation’s income statement as interest expense and will reduce the line net income before income tax expense and the line income tax...
Our Explanation of Accounting Principles provides you with clear and concise descriptions of the basic underlying guidelines of accounting. You will see how the accounting principles affect the balance sheet and income...
, but it is not yet deducted from the company's books. Therefore, a journal entry is required to deduct the bank service charge from the general ledger account Cash and also to debit an account such as Bank Fee...
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...
it is the remainder after subtracting operating expenses (SG&A) from gross profit. Mark as wrong Mark as right accrual method of accounting (or) accrual basis of accounting This method is required by large...
Our Explanation of Bank Reconciliation will show you the needed adjustments to the balance on the bank statement and also the adjustments needed to the balance in the related general ledger account. A comprehensive...
, net 30”. This means that the customer may deduct 1% from the net amount due if the payment is made within 10 days of the date of the invoice. For instance, if a sale is made for 200 units at $15 each, the gross...
of the corporation, they must comply with generally accepted accounting principles (GAAP or US GAAP). GAAP includes underlying concepts such as the historical cost principle, matching principle, revenue recognition,...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
employment agency service to provide workers from December 15 to December 29. The temp agency will bill the retailer on January 6 and the retailer is required to pay the invoice by January 10. Assuming the retailer’s...
of ______________ expenses reports expenses by both function and nature and is required for nonprofit entities. FUNCTIONAL LTCNNAOFIU Unscramble FUNCTIONAL UNCFILTNAO Unscramble 12. An asset where the principal must be...
of the illusory profit and brings attention to the need to increase selling prices or take other action to maintain its same level of profits. Avoiding paying income taxes on the illusory profits gives the company some...
is required because of the matching principle. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your Accounting and Bookkeeping Career Perform better at your current job Refresh...
of the __________ __________ __________ of the joint products. Select... number of units net realizable value 17. The allocation of joint costs is required for __________. Select... decision making external financial...
Featured Review
"My current position is as Accounting Manager for a construction company. I became a PRO user years ago while struggling through some of my higher-level accounting classes in college, due to some faulty teaching in lower-level courses. I like that the materials on AccountingCoach range from base knowledge all the way up to detailed explanations on fairly complicated subjects. From the start, the subject matter is explained in great detail, and the interactive ways to apply the knowledge are excellent to drill it in. I have benefited from my PRO membership because I have turned the skills I learned between this and school into a career that I love." - Joseph S.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviews
For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.
We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: