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What two accounts are affected by the adjusting entry Merchandise Inventory?
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What accounts are affected and how when merchandise is purchased for cash?
no accounts, the only time an account would be affected is when you withdraw or deposit money into/from it, cash is nearly untraceable and does not affect your bank accounts
What accounts are not affected by closing entries?
the accounts affected by closing entries are temporary accounts like expenses
What accounts affected in received payment on account?
"what accounts are affected and how when a payment on account is received from a customer
How does inventory affect profit?
Inventory PurchasesWhen you purchase items for inventory, the transaction will affect your balance sheet, the financial statement that provides a snapshot of your company's worth based on its assets and liabilities. You record the value of the inventory; the offsetting entry is either cash or accounts payable, depending on the method you used to purchase the goods. At this point, you have not affected your profit and loss or income statement.Inventory SoldOver time, you use the items in your inventory to fill customer orders. You record the sales in an income statement account; the offset to sales is either cash or accounts receivable, which are both balance sheet accounts. Because you used inventory from a balance sheet account and recorded sales on your income statement, your profits are overstated unless you make the necessary adjustment. You need to reduce your inventory for the value of the items sold, with the offsetting entry to a cost-of-goods sold account. Your cost-of-goods sold account is an income statement account. You have now affected your profit and loss.Inventory AdjustmentsIn the normal course of business, you might find that the balance in your inventory is inaccurate. This might be due to breakage occurring after the goods were in your possession, the failure to add returned goods back to your inventory or errors that you simply cannot explain. You might also have products in your inventory that you know you cannot sell for full price, such as a supply of the current year's calendars remaining in June. You need to adjust your inventory to an accurate value, so you credit inventory and debit your cost-of-goods sold account, which again affects your profit and loss statement.Inventory Reserve AccountA major inventory adjustment, such as adjusting inventory only at year-end, can play havoc with your profit and loss statement for the period in which you make the adjustment. To avoid skewing the numbers, companies sometimes use an inventory reserve account. The basic idea is that they know that a certain percentage of their inventory has historically been lost or become obsolete. Each month, they record an amount, typically a percentage of the inventory value, in an inventory reserve account. The inventory reserve account is a balance sheet account and should have a negative balance; when netted against your positive-balance inventory accounts, you have a more accurate picture of your inventory's worth. The offset to the entry is your cost-of-goods sold account. When you need to adjust your inventory, you record the entry to your inventory reserve account and offset it against your cost-of-goods sold account. By taking smaller, more frequent adjustments, you do not risk a major impact.
What accounts are affected when services are provided on account?
Accounts Receivable - Debit Service Revenue - Credit
What are the cash accounts and non cash accounts in the financial statements and their characteristics?
If you get 20,000.00 cas for inventory and get 20,000.00 in inventory what T accounts are affected
What accounts are affected and how when merchandise is purchased for cash?
no accounts, the only time an account would be affected is when you withdraw or deposit money into/from it, cash is nearly untraceable and does not affect your bank accounts
What accounts are affected by closing entries?
the accounts affected by closing entries are temporary accounts like expenses
What accounts are not affected by closing entries?
the accounts affected by closing entries are temporary accounts like expenses
What accounts affected in received payment on account?
"what accounts are affected and how when a payment on account is received from a customer
How does inventory affect profit?
Inventory PurchasesWhen you purchase items for inventory, the transaction will affect your balance sheet, the financial statement that provides a snapshot of your company's worth based on its assets and liabilities. You record the value of the inventory; the offsetting entry is either cash or accounts payable, depending on the method you used to purchase the goods. At this point, you have not affected your profit and loss or income statement.Inventory SoldOver time, you use the items in your inventory to fill customer orders. You record the sales in an income statement account; the offset to sales is either cash or accounts receivable, which are both balance sheet accounts. Because you used inventory from a balance sheet account and recorded sales on your income statement, your profits are overstated unless you make the necessary adjustment. You need to reduce your inventory for the value of the items sold, with the offsetting entry to a cost-of-goods sold account. Your cost-of-goods sold account is an income statement account. You have now affected your profit and loss.Inventory AdjustmentsIn the normal course of business, you might find that the balance in your inventory is inaccurate. This might be due to breakage occurring after the goods were in your possession, the failure to add returned goods back to your inventory or errors that you simply cannot explain. You might also have products in your inventory that you know you cannot sell for full price, such as a supply of the current year's calendars remaining in June. You need to adjust your inventory to an accurate value, so you credit inventory and debit your cost-of-goods sold account, which again affects your profit and loss statement.Inventory Reserve AccountA major inventory adjustment, such as adjusting inventory only at year-end, can play havoc with your profit and loss statement for the period in which you make the adjustment. To avoid skewing the numbers, companies sometimes use an inventory reserve account. The basic idea is that they know that a certain percentage of their inventory has historically been lost or become obsolete. Each month, they record an amount, typically a percentage of the inventory value, in an inventory reserve account. The inventory reserve account is a balance sheet account and should have a negative balance; when netted against your positive-balance inventory accounts, you have a more accurate picture of your inventory's worth. The offset to the entry is your cost-of-goods sold account. When you need to adjust your inventory, you record the entry to your inventory reserve account and offset it against your cost-of-goods sold account. By taking smaller, more frequent adjustments, you do not risk a major impact.
How many accounts are affected by a transaction?
2
What accounts are affected when services are provided on account?
Accounts Receivable - Debit Service Revenue - Credit
When purchases are made on credit what three accounts are affected on a balance sheet?
Assets are affected such as supplies are increased on debit side. Accounts payable is affected by being credited or increased. Owners equity is also affected by being credited or lowered on the balance sheet.
What accounts are affected when an apartment tenant prepays their rent 3 months in advance?
cash and accounts payable
What accounts are affected when paying on account?
When you pay on account, the entry is Cash - Debit Accounts Payable - Credit
What two accounts are affected when a business receives cash from sales?
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