Company Purchased Office Supplies Costing $3000 And Debited

1a Company Purchased Office Supplies Costing 3000 And Debited Offic

1. A company purchased office supplies costing $3,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $600 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be: (Points : 1) debit Office Supplies Expense, $3,600; credit Office Supplies, $3,600. debit Office Supplies, $600; credit Office Supplies Expense, $600. debit Office Supplies Expense, $2,400; credit Office Supplies, $2,400. debit Office Supplies, $2,400; credit Office Supplies Expense, $2,400.

2. If total liabilities decreased by $4,000, then (Points : 1) stockholders' equity must have decreased by $4,000. assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000. assets and stockholders' equity each increased by $2,000. assets must have increased by $4,000.

3. The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is: (Points : 1) debit Laundry Supplies Expense, $2,000; credit Laundry Supplies, $2,000. debit Laundry Supplies, $4,500; credit Laundry Supplies Expense, $4,500. debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000. debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500.

4. If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements? (Points : 1) Failure to make an adjustment does not affect the financial statements. Expenses will be overstated and net income and stockholders' equity will be under- stated. Assets will be overstated and net income and stockholders' equity will be understated. Assets will be overstated and net income and stockholders' equity will be overstated.

5. Which of the following accounts has a normal credit balance? (Points : 1) Prepaid Rent Notes Receivable Rent Revenue Rent Expense

6. On October 1, 2012, Metz Industries had an Accounts Payable balance of $60,000. During the month, the company made purchases on account of $50,000 and made payments on account of $80,000. At October 31, 2012, the Accounts Payable balance is (Points : 1) $60,000 debit $20,000 credit $30,000 credit $80,000 credit

7. Adjusting entries are: (Points : 1) not necessary if the accounting system is operating properly. usually required before financial statements are prepared. made whenever management desires to change an account balance. made to balance sheet accounts only.

8. When a company receives a utility bill but will not pay it right away, it should (Points : 1) debit Utilities Expense and credit Accounts Receivable. debit Utilities Expense and credit Accounts Payable. debit Accounts Payable and credit Utilities Expense. make no entry until the bill is paid.

9. For the basic accounting equation to stay in balance, each transaction recorded must (Points : 1) affect two or less accounts. affect two or more accounts. always affect exactly two accounts. affect the same number of asset and liability accounts.

10. On March 1, 2012, Freeze Company hires a new employee who will start to work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not? (Points : 1) Yes, the company is now obligated to pay the employee, thus that event must be recorded. No, hiring an employee is an important event; however, it is not an economic event that should be recorded. Yes, failure to record the event would cause the financial statements to be misleading. No, the financial position of the company has been changed; however, the dollar amount of the transaction is not yet known.

Paper For Above instruction

The provided questions primarily focus on fundamental accounting principles and their applications in practical scenarios, offering an excellent overview of the core concepts necessary for accurate financial reporting. These include adjusting entries, understanding account balances, transaction effects on the accounting equation, and recognition of expenses and revenues within the correct periods. In this paper, these topics are examined in detail, illustrating their importance in maintaining the accuracy, reliability, and integrity of financial statements—crucial elements for informed decision-making by stakeholders, including managers, investors, and regulators.

One of the fundamental aspects illustrated is the need for proper adjusting journal entries, which ensure that financial statements reflect the true financial position and performance of a company at the end of an accounting period. For instance, the adjustment involving office supplies demonstrates the importance of matching expenses with revenues by recognizing supplies used during the period. By debiting Office Supplies Expense and crediting Office Supplies for the amount used ($3,000 - $600 = $2,400), accountants adhere to the matching principle, ensuring expenses are recorded in the period they are incurred (Garsombke & Stewart, 2008). Similarly, the laundry supplies example emphasizes the necessity of adjusting inventory accounts to reflect actual consumption, thereby providing a realistic view of supplies on hand.

Liabilities and their management also play a vital role in financial accounting. The scenario involving Accounts Payable demonstrates how payments and purchases influence the account balance, ultimately affecting the company's liquidity. The calculation of the Accounts Payable balance after transactions ($60,000 + $50,000 - $80,000 = $30,000) underscores the importance of recording both increases and decreases to liabilities to reflect changes accurately. Proper recording ensures compliance with accounting standards and facilitates effective financial analysis (Harrison et al., 2018). Additionally, understanding the normal balances of accounts, such as recognizing that revenue accounts carry a credit balance while expenses have a debit balance, is essential for accurate journal entries and financial statement preparation.

The discussion on the impact of failing to adjust prepaid expenses, specifically prepaid rent, highlights a common error that can distort financial outcomes. Ignoring such adjustments results in overstated assets and understated expenses, leading to inflated net income and equity. Proper recognition of expenses when they are incurred aligns with the accrual basis of accounting and is mandated by generally accepted accounting principles (GAAP) (Schroeder et al., 2017). These principles ensure consistency, comparability, and transparency across financial reports.

Further, the importance of recording transactions immediately upon occurrence, such as hiring an employee, is emphasized. While the hiring itself does not impact economic resources directly until the employee begins work, the obligation to pay the employee creates a liability that should be recognized once the service has been rendered (Bhai, 2020). This approach aligns with the recognition criteria in accrual accounting, which focus on when economic events occur rather than when cash exchanges hands.

In sum, these questions encapsulate key principles in accounting, including the matching principle, proper recognition of liabilities, the significance of adjusting entries, and understanding the effects of transactions on the fundamental accounting equation. Mastery of these concepts is essential for preparing accurate, compliant, and meaningful financial statements that serve as a reliable basis for decision-making and strategic planning. Ensuring proper recording and adjustments uphold the integrity and utility of financial reports, ultimately supporting stakeholders in evaluating a company's financial health.

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