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 in the current year is described as follows. a. On September 1, received advance payment from a shopping center for property management services to be performed over the three-month period beginning September 1. The entire amount received was credited directly to a revenue account. b. On December 1, received advance payment from the same customer described in part a for services to be rendered over the three-month period beginning December 1. This time, the entire amount received was credited to an unearned revenue account. c. Rendered management services for many customers in December. Normal procedure is to record revenue on the date the customer is billed, which is early in the month after the services have been rendered. d. On December 15, made full payment for a one-year insurance policy that goes into effect on January 2 of the upcoming year. The cost of the policy was debited to Unexpired Insurance. e. Numerous purchases of equipment were debited to asset accounts, rather than to expense accounts. f. Payroll expense is recorded when employees are paid. Payday for the last two weeks of December falls on January 2 of the upcoming year.
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 in the current year is described as follows.
a. On September 1, received advance payment from a shopping center for property management services to be performed over the three-month period beginning September 1. The entire amount received was credited directly to a revenue account.
b. On December 1, received advance payment from the same customer described in part a for services to be rendered over the three-month period beginning December 1. This time, the entire amount received was credited to an unearned revenue account.
c. Rendered management services for many customers in December. Normal procedure is to record revenue on the date the customer is billed, which is early in the month after the services have been rendered.
d. On December 15, made full payment for a one-year insurance policy that goes into effect on January 2 of the upcoming year. The cost of the policy was debited to Unexpired Insurance.
e. Numerous purchases of equipment were debited to asset accounts, rather than to expense accounts.
f. Payroll expense is recorded when employees are paid. Payday for the last two weeks of December falls on January 2 of the upcoming year.
Instructions:
For each item, explain whether an
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