Security Service Company adjusts its accounts at the end of the-01990
This subjective question is related to the book/course
vu mgt411 Money & Banking.
It can also be found in
vu mgt411 Mid Term Solved Past Paper No. 7.
Question 1: Security Service Company adjusts its accounts at the end of the month. On November 30, adjusting entries are prepared to record:
Adjusting Entries For The Month Ended Nov 30
Requirement:
Indicate the effect of each of these adjusting entries on the major elements of the company's income statements i.e. upon revenue, expenses, net income. Organize your answer in the table given below and use the symbols I for increase, D for decrease, and NE for no effect.
a Deprecation expense
Accumulated depreciation Decrease Increase Decrease
b Interest expense
Accrued interest Decrease Increase Decrease
c Accrued revenue
revenue Increase Decrease Increase
d Salaries
Accrued salaries Decrease Increase Decrease
e Prepaid insurance Increase Decrease Increase
- Depreciation expense for November
- Interest expense that has accrued during November
- Revenue earned during November that has not yet been billed to customers
- Salaries, payable to company employees that have accrued since the last pay day in November
- e. The portion of the company's prepaid insurance that has expired during November
Adjusting Entries For The Month Ended Nov 30
Requirement:
Indicate the effect of each of these adjusting entries on the major elements of the company's income statements i.e. upon revenue, expenses, net income. Organize your answer in the table given below and use the symbols I for increase, D for decrease, and NE for no effect.
Answer:
Adjusting entries Revenue Expenses Net incomea Deprecation expense
Accumulated depreciation Decrease Increase Decrease
b Interest expense
Accrued interest Decrease Increase Decrease
c Accrued revenue
revenue Increase Decrease Increase
d Salaries
Accrued salaries Decrease Increase Decrease
e Prepaid insurance Increase Decrease Increase
