Masterfalls Corporation purchased a one-year insurance policy in January 2017 for $36,000. The insurance policy is in effect from March 2017 through February 2018. If the company neglects to make the proper year-end adjustment for the expired insurance: Group of answer choices net income and assets will be understated by $30,000. net income and assets will be overstated by $30,000. net income and assets will be understated by $6,000. net income and assets will be overstated by $6,000.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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