Balance day adjustments - L'equazione Accounting | it - 262 - 25085
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# L'equazione Accounting

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• Note di Apprendimento
• Revisione degli argomenti
 BabaJide Martins F. 0 0 Expenses are understated, leading to profit being overstated by \$400 in the Profit and Loss statement.
 Alice B. 0 0 Is it acceptable to also describe the accounting equation as the difference made at the beginning of the month and at the end of the month that is equity= assets+ liability.? Since the accounting equation has to be balance and not weigh on the right or left side that is Debit or Credit side but equal.
 Hermina S. 0 0 Very well explained.
 Morne V. 0 0 When adopting this approach the payment is initially recognised as an asset rather than as an expense. At the end of each period part of this asset is allocated as an expense and posted to the Profit and Loss account.
 Morne V. 0 0 Information is crystal clear and particularly, illustration is very informative
 Sunday O. 0 0 the accounting equation
 Odongo M. 0 0 Accounting -> Topics -> Balance day adjustments -> Illustration - the accounting equation Illustration - the accounting equation Illustration of use A difficult question to ask would be to describe the effect of failing to make the reversing entry for Prepaid Rent Expense of \$400. This question can be approached as follows: RESPONSE: Expenses are understated, leading to profit being overstated by \$400 in the Profit and Loss statement. In the balance sheet assets are overstated and owner's equity (proprietorship) is overstated (that is, profit increases by \$400). Stock loss or gain, and the disposal of non-current assets with an accompanying profit or loss, must also be accounted for in the relevant journal, ledger, record and report. These items fall under the topic of balance day adjustments. Apart from the traditional adjustments students may well be examined on the 'asset approach for recording transactions where payment precedes benefit received'. When adopting this approach the payment is initially recognised as an asset rather than as an expense. At the end of each period part of this asset is allocated as an expense and posted to the Profit and Loss account. No reversing entries are required.
 Saul K. 0 0 well elaborated
 Manish K. 0 0 Information is crystal clear and particularly, illustration is very informative.
 Davidson Ade O. 0 0 understood