(b) Increases the balance of a revenue account. Post journal Entries: 7. Well, in this case, we would simply add. increases the balance of an expense account. The two main reasons for electing S corporation status are: Avoid double taxation on distributions. Adjusting entries are a little different for depreciation. Increases the balance of an expense account c. Increases the balance of a liability account. It is also important to show that the debt might be converted to equity, and financial statements should clearly demonstrate this fact. a. increases the balance of a contra asset account b. increases the balance of an asset account c. decreases the balance of an stockholders' equity account d. increases the balance of an expense account. Part 2. It is calculated as follows: $260 x ($1,360 / $2,260) = $156.46; Company A can then make an adjustment of $156.46 to reduce the HST remittance at any time in the four years following the date when the bad debt write-off occurred. (a) Increases the balance of a liability account. During the month when the office supplies are used, an adjusting entry is made to debit office supply expense and credit prepaid office supplies. b. b. C. decreases the balance of a stockholders’ equity account As an example of an accrued item, consider the accrual of interest revenue. Increases the balance of an expense account. "I am a daughter of Cleveland. increases the balance of an asset account . Post Closing Entries: 3. Prepare Financial Statements: Accounts are two different groups: Permanent – balance sheet accounts including assets, liabilities, and most equity accounts. If you credit revenue, then you increase revenue, so to debit revenue will decrease revenue. If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry? decreases the balance of an stockholders' equity account This accounts for varying population sizes, some effects of inflation, and the capacity of governments to service their debts. Post Adjusting Journal Entries: 10. Cumulative translation adjustments (CTAs) are an integral part of the financial statements for companies with international business operations. See Answer Add To cart Related Questions. If the effect of the debit portion of an adjusting entry is to increase the balance of an expense a. dr.two. The adjusting entry will include: (1) recognition of expense and (2) decrease in the asset initially recorded (since some of it has already been used). If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry? What if, instead of a credit balance in the allowance account, we posted a debit balance prior to the adjustment? Step by Step Accounting for Convertible Bond (Debt) An accounting will be split up into three different parts: Depreciation: Depreciation is the process of allocating the cost of an asset, such as a building or a piece of equipment, over the serviceable or economic life of the asset. (c) Increases the balance of an expense account. Prepare Unadjusted Trial Balance: 8. For example, let’s say there was a $175 debit existing in the allowance account. A deferred entry is made to show the insurance expense in the period in which the insurance coverage is in effect. a. B. increases the balance of an expense account. I was raised … 1.99. What is the debit/credit effect of a prepaid expense adjusting entry? If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account describe the effect of the credit portion of the entry? Accounting the equity & debt portion separately will show the true financial cost of the organization. When we post this adjusting journal entry, you can see the ending inventory balance matches the physical inventory count and cost of good sold has been increased. Therefore, the balance in the current asset account Supplies should be a debit balance of $700, not the present balance of $1,500. Students also viewed these Accounting questions What types of accounts does a company debit and credit in a prepaid expense adjusting … a. The balance in the current asset account Supplies before any adjustment is a debit balance of $1,500. So, when you credit expenses you will decrease expenses. Thus, it is recorded at the end of the year. A. increases the balance of a contra asset account. If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry? A) Increases the balance of liability B) Increase the balance of revenue C) Increase the balance of expense I said it was A.... the asset is on the debit side, so liability is going to credited -increasing it. Accrued Items. The impact of the election is that the S corporation's items of income, loss, deductions and credits flow to the shareholder and are taxed on the shareholder's personal return. If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry? Adjusting Entries - Asset Accounts. “Order a similar paper and get 15% discount on your first order with us Use the following coupon “FIRST15” Order Now a. Part III: shown in debit column Column Effect 1 Date of Warrant, 2 Details of transaction, 5 Reference number, 6 Debit amount, 9 Copy back the amount of “Outstanding Liability”, 10 Copy back to the amount of “Net expenditure” , 11 Decrease balance to date amount. In effect, we are transferring $20,000, one-third of $60,000, from the Unearned Rent Income (a liability) to Rent Income (an income account) since that portion has already been earned. Non-cash expenses – Adjusting journal entries are also used to record paper expenses like depreciation, amortization, and depletion. Adjusting Entry Best Practices. Students also viewed these Accounting questions. 0 1 2. Accruals & Deferrals, Avoiding Adjusting Entries. If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry? Asked by Wiki User. For example, depreciation is usually calculated on an annual basis. The required disclosure is (a) the nature of the event and (b) an estimate of its financial effect or a statement that a reasonable estimate of the effect cannot be made. In preparing the adjusting entry, our goal is to transfer the used part from the asset initially recorded into expense – for us to arrive at the proper balances shown in the illustration above. If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account, which of the following statements describes the effect of the credit portion of the entry? How to Make Adjusting Entries. If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry? Oincreases the balance of an asset account Odecreases the balance of an owner's equity account Oincreases the balance of a contra asset account Oincreases the balance of an expense account fullscreen. Adjusting Entries - Liability Accounts. Prepare Post-Closing Trial Balance : 4. Shareholder Loss Limitations An S corporation is a corporation with a valid "S" election in effect. If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following statements describes the effect of the debit portion of the entry? Increases the balance of an expense account. These expenses are often recorded at the end of period because they are usually calculated on a period basis. Corporate Financial Accounting (12th Edition) Edit edition. Turner touched on her Cleveland roots — a large part of Ohio's 11th district — in her announcement video. Increases the balance of a revenue account. Increases the balance of a revenue account. Expert Answer . To adjust for such factors across nations and over time, economists and government agencies commonly measure government debt as a portion of each nation’s annual economic output, or gross domestic product (GDP). Increases the balance of a revenue account. Part 4. Question. The actual amount of supplies on hand (unused) was determined to be $700. increases the balance of a contra asset account . 4. Prepare Adjusted Trial Balance: 11. Like regular transactions, adjusting entries are recorded as journal entries. Problem 6DQ from Chapter 3: If the effect of the debit portion of an adjusting entry is ... Get solutions In order to record the adjustment, we simply take the $372 and add the $175 to get $547 and we record it as follows: A company usually has a standard set of potential adjusting entries, for which it should evaluate the need at the end of every accounting period. An expense account c. Increases the balance sheet accounts including assets,,! 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