1)
Impact of
Adjusting entries are passed in the books of accounts at the end of the year to record certain transactions that are required to be journalized in order to comply with applicable regulatory and legal framework.
Examples of adjusting entries are charging depreciation expenses on
Asset accounts for which adjusting entries maybe recorded.
2)
Impact of adjusting entries on Financial Statements
Adjusting entries are passed in the books of accounts at the end of the year to record certain transactions that are required to be journalized in order to comply with applicable regulatory and legal framework.
Examples of adjusting entries are recording of expenses payable in the future periods, pertaining to current period.
Liability accounts for which adjusting entries maybe recorded.
3)
Recording of Assets at historical cost
In this practice assets are recorded at their historical purchase price throughout the lifetime of the asset.
All depreciation is posted to revenue accounts and instead of reducing the value of the asset, a separate account called
This depreciation is denoted as a deduction from the value of the asset in the financial statements.
How the depreciable assets are carried on the
Want to see the full answer?
Check out a sample textbook solution
Chapter 3 Solutions
Horngren's Accounting (11th Edition)
- Which of the following is correct on these general accounting question?arrow_forwardThe ABC Co. uses the gross profit method to estimate inventory and cost of goods sold for interim reporting purposes. Management estimates that the average gross profit rate is 25 percent of sales. The following data relate to the month of May: Inventory cost, July 1 $30,000 Purchases during the month at cost 80,400 Sales 100,800 Sales returns 3,600 Using the data above, what is the estimated ending inventory at July 31? A. $24,300 B. $25,200 C. $34,800 D. $37,500arrow_forwardCost Accountarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education