To illustrate, let's assume that on December 29 a company ordered and received some equipment to be used in its operations. The payment for the equipment is to be made on February 10. Under the accrual method, on December 29 the company should debit the asset account Equipment and credit the liability account Accounts Payable. (When the supplier or vendor is paid on February 10, the company's asset Cash will be credited and its liability account Accounts Payable will be debited.)
Does the accrual method apply to the purchase of equipment?
Free Financial Statements Cheat Sheet
- Where does the purchase of equipment show up on a profit and loss statement?
- What is cash from operating activities?
- What is a purchase discount?
- Why are wages reported as an expense when the work occurs, but the employees' tax records report them when they are paid?
- What is the accrual method?
- What is Notes Payable?
To learn more, see the Related Topics listed below:
Related TopicsBalance Sheet Accounting Principles Debits and Credits Accounting Basics
Related Business Forms