Property Management Professionals provides building management services toowners of office buildings and shopping centers. The company closes its accounts atthe end of the calendar year. The manner in which the company has recorded severaltransactions occurring during 201 7 is described as follows. On December 15, made full payment for a oneyear insurance policy that goes intoeffect on January 2, 201 8 . The cost of the policy was debited to Unexpired For each item above, explain whether anadjusting entry is needed at December 31,201 7 , and state the reasons for your answer. If you recommend an adjusting entry,explain the effects this entry would have on assets, liabilities, owners' equity, revenue,and expenses in the 201 7 financial statem ents.
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.
Property Management Professionals provides building management services to
owners of office buildings and shopping centers. The company closes its accounts at
the end of the calendar year. The manner in which the company has recorded several
transactions occurring during 201 7 is described as follows.
On December 15, made full payment for a one
year insurance policy that goes into
effect on January 2, 201 8 . The cost of the policy was debited to Unexpired
For each item above, explain whether an
201 7 , and state the reasons for your answer. If you recommend an adjusting entry,
explain the effects this entry would have on assets, liabilities, owners' equity, revenue,
and expenses in the 201 7 financial statem ents.
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