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Q. What is Prepaid expense?
A prepaid expense is an asset pending assignment to expense such as prepaid rent, prepaid insurance and supplies on hand. Note that the character of these three adjustments is the same. Prepaid insurance When a company pays an insurance policy premium in advance, the purchase creates the asset prepaid insurance. This go forward payment is an asset because the company will receive insurance coverage in the future. With the way of time but the asset gradually expires. The part that has expired becomes an expense. To exemplify this point recall that in section 2 Micro Train Company purchased for cash an insurance policy on its trucks for the period 2010 December 1 to 2011 November 30. The journal entry prepared on 2010 December 1 to record the purchase of the policy was
The two accounts recitations to insurance are Prepaid Insurance (an asset) and Insurance Expense (an expense). Subsequent to posting this entry the Prepaid Insurance account has a USD 2400 debit balance on 2010 December 1. The Insurance Expense account contains a zero balance on 2010 December 1 for the reason that no time has elapsed to use any of the policy's benefits.
A department transferred 7,000 units to the finished goods storeroom during a month. There was no beginning work in process inventory, but 500 units were still in process at the
Q. Why we need book value? Book value -- total assets minus total liabilities. Book value also meansvalue of an asset as recorded on the company's financial reports or books. B
Q. Transactions affecting only the balance sheet? Since every transaction affecting a business entity must be recorded in the accounting records analyzing a transaction before
Define Accounting. Briefly explain the accounting concepts which guide the accountant at the recording stage.
On January 1, 2012, Muller Co. borrowed cash from Washington Valley Bank by issuing a $100,000 face value 3-year installment note payable that carried a 7% interest rate. The note
Limitations of Funds Flow Statement : despite the a variety of uses of the announcement, it has convinced problems also. They consist of the subsequent i) It cannot substitute
A firm's __________ account is categorized as a current asset. A. equipment B. accounts payable C. bonds payable D. merchandise inventory
Q. What do you understand by Deferred income? Deferred income -- a liability which arises when a company is paid in advance for services orgoods that will be provided later. Fo
Needs the entries for the following scenarios: Capital accounts as follows : Mason ; 90,000 Jiri; 30,000 James; 60,000 a) Frank pays mason 25,000 for 20% of masons interest i
On June 1st, Green Pea, Inc. purchased $1,200 worth of supplies on account. How does this transaction affect Green Pea's accounts? a. Increase supplies and accounts payable by $
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