On the balance day, the accrued expense of utility is treated as a current liability (accounts payable or accrued expense) owed to the utility company, and an expense (Utility Expense) incurred by the company in February. In the reporting period of March, the company should record its cash ...
Department 1 could use 5-001-1 for its supplies expense while department 2 could use 5-0001-2 to differentiate it from the other departments.Example and TemplateHow to Use the Chart of AccountsThere are many different ways to structure a chart of accounts, but the important thing to ...
Accrued liabilities will only exist in your business structure when you are using anaccrual method of accounting. They require a debit to one of your expense accounts, and a credit to the accrued liability account. This is then reversed when you make a payment with a credit to the expense ...
Factoring Expense [0.08×100,000] 8,000 Due from Factor 10,000 Accounts Receivable 100,000December 31, 20X5: The journal entries will differ under the two types of factoring. Since the actual bad debts exceed the amount initially retained by the factor, Impatient Inc must pay the factor...
earnings account. That is why these accounts are called temporary accounts. They don’t perpetually have a balance. Every year they are zeroed out and closed. Temporary accounts consist of revenue, expense, and distribution/dividend accounts. These are all accounts that appear on the income ...
Let’s figure out the monthly interest expense: Monthly Interest Expense = $60,000 × 8% × 1/12 = $400 The journal entry for the end of the month (for every month of the year) would be: After the interest owed is paid back to the bank, the accounts are adjusted as follows: ...
During the year before preparing the final statements of accounts, it decided to develop an accounting spreadsheet as an intermediate step. During the year, two adjustments were made, including the payment of rent of $1,500 in advance and the depreciation expense of $2,000. The unadjusted ...
When accounts payable, accrued expenses, and unearned revenue increase, they cause an increase in cash. At the bottom of the operating cash flow section, we can see the total, which is labeled as “Net cash provided by (used in) operating activities.” The line is the sum of all items ...
Many organizations structure their COAs so that expense information is separately compiled by department. Thus, the sales department, engineering department, and accounting department all have the same set of expense accounts. Examples of expense accounts include thecost of goods sold (COGS),depreciatio...
The expense ratio of a fund or ETFis important becauseit lets an investor know how much they pay to invest in a specific fund and how much their returns will be reduced. The lower the expense ratio the better because an investor receives higher returns on their invested capital.3 How Is ...