Identify which of the given entry is an example of an adjusting entry.

Question

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 1SSQ

To determine

Identify which of the given entry is an example of an adjusting entry.

Expert Solution & Answer

Answer to Problem 1SSQ

b. Recording depreciation expense on a truck.

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Justification for incorrect option:

a. recording the purchase of supplies on account, c. recording the billing of customers for services rendered, and d. recording the payment of wages to employees are examples of journal entry, as these direct business transaction. Hence, option a, c, and d are incorrect options.

Justification for correct option:

b. Recording depreciation expense on a truck is the example of an adjusting entry, because it is estimation but not a direct expenditure, and allocation of cost of using the truck in revenue generation through its useful life. It is required to be made as per matching principle of accrual accounting.

Hence, the correct answer is b. Recording depreciation expense on a truck.

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Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 1SSQ

To determine

Identify which of the given entry is an example of an adjusting entry.

Expert Solution & Answer

Answer to Problem 1SSQ

b. Recording depreciation expense on a truck.

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Justification for incorrect option:

a. recording the purchase of supplies on account, c. recording the billing of customers for services rendered, and d. recording the payment of wages to employees are examples of journal entry, as these direct business transaction. Hence, option a, c, and d are incorrect options.

Justification for correct option:

b. Recording depreciation expense on a truck is the example of an adjusting entry, because it is estimation but not a direct expenditure, and allocation of cost of using the truck in revenue generation through its useful life. It is required to be made as per matching principle of accrual accounting.

Hence, the correct answer is b. Recording depreciation expense on a truck.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 1SSQ

To determine

Identify which of the given entry is an example of an adjusting entry.

Expert Solution & Answer

Answer to Problem 1SSQ

b. Recording depreciation expense on a truck.

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Justification for incorrect option:

a. recording the purchase of supplies on account, c. recording the billing of customers for services rendered, and d. recording the payment of wages to employees are examples of journal entry, as these direct business transaction. Hence, option a, c, and d are incorrect options.

Justification for correct option:

b. Recording depreciation expense on a truck is the example of an adjusting entry, because it is estimation but not a direct expenditure, and allocation of cost of using the truck in revenue generation through its useful life. It is required to be made as per matching principle of accrual accounting.

Hence, the correct answer is b. Recording depreciation expense on a truck.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 1SSQ

To determine

Identify which of the given entry is an example of an adjusting entry.

Expert Solution & Answer

Answer to Problem 1SSQ

b. Recording depreciation expense on a truck.

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Justification for incorrect option:

a. recording the purchase of supplies on account, c. recording the billing of customers for services rendered, and d. recording the payment of wages to employees are examples of journal entry, as these direct business transaction. Hence, option a, c, and d are incorrect options.

Justification for correct option:

b. Recording depreciation expense on a truck is the example of an adjusting entry, because it is estimation but not a direct expenditure, and allocation of cost of using the truck in revenue generation through its useful life. It is required to be made as per matching principle of accrual accounting.

Hence, the correct answer is b. Recording depreciation expense on a truck.

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Answer 5

Chapter 3, Problem 1SSQ

To determine

Identify which of the given entry is an example of an adjusting entry.

Expert Solution & Answer

Answer to Problem 1SSQ

b. Recording depreciation expense on a truck.

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Justification for incorrect option:

a. recording the purchase of supplies on account, c. recording the billing of customers for services rendered, and d. recording the payment of wages to employees are examples of journal entry, as these direct business transaction. Hence, option a, c, and d are incorrect options.

Justification for correct option:

b. Recording depreciation expense on a truck is the example of an adjusting entry, because it is estimation but not a direct expenditure, and allocation of cost of using the truck in revenue generation through its useful life. It is required to be made as per matching principle of accrual accounting.

Hence, the correct answer is b. Recording depreciation expense on a truck.

Answer 6

Chapter 3, Problem 1SSQ

To determine

Identify which of the given entry is an example of an adjusting entry.

Expert Solution & Answer

Answer to Problem 1SSQ

b. Recording depreciation expense on a truck.

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Justification for incorrect option:

a. recording the purchase of supplies on account, c. recording the billing of customers for services rendered, and d. recording the payment of wages to employees are examples of journal entry, as these direct business transaction. Hence, option a, c, and d are incorrect options.

Justification for correct option:

b. Recording depreciation expense on a truck is the example of an adjusting entry, because it is estimation but not a direct expenditure, and allocation of cost of using the truck in revenue generation through its useful life. It is required to be made as per matching principle of accrual accounting.

Hence, the correct answer is b. Recording depreciation expense on a truck.

Answer 7

Chapter 3, Problem 1SSQ

To determine

Identify which of the given entry is an example of an adjusting entry.

Answer 8

Expert Solution & Answer

Answer to Problem 1SSQ

b. Recording depreciation expense on a truck.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Justification for incorrect option:

a. recording the purchase of supplies on account, c. recording the billing of customers for services rendered, and d. recording the payment of wages to employees are examples of journal entry, as these direct business transaction. Hence, option a, c, and d are incorrect options.

Justification for correct option:

b. Recording depreciation expense on a truck is the example of an adjusting entry, because it is estimation but not a direct expenditure, and allocation of cost of using the truck in revenue generation through its useful life. It is required to be made as per matching principle of accrual accounting.

Hence, the correct answer is b. Recording depreciation expense on a truck.