The following transactions occurred during a recent year: a. Paid wages of $1,450 for the current period (example). b. Borrowed $7,250 cash from local bank using a short-term note. c. Purchased $2,900 of equipment on credit. d. Earned $580 of sales revenue; collected cash. e. Received $1,160 of utilities services, on credit. f. Earned $2,450 of service revenue, on credit. g. Paid $435 cash on account to a supplier. h. Incurred $100 of travel expenses; paid cash. i. Earned $580 of service revenue; collected half in cash, with balance on credit. j. Collected $160 cash from customers on account. k. Incurred $420 of advertising costs; paid half in cash, with balance on credit. Required: 1. For each of the transactions, complete the following table, indicating the account, amount, and direction of the effect (+ for increase and - for decrease) of each transaction under the accrual basis. Include revenues and expenses as subcategories of stockholders' equity, as shown for the first transaction, which is provided as an example. 2. Determine the company's preliminary net income.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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