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An adjusting entry would adjust an expense account so the expense is reported when incurred?
True
Which account is not classified as a selling expense Freight-Out or Sales Salaries or Advertising Expense or Sales Discounts?
Which account is not classified as a selling expense?
Are advertising expense a liability?
No, advertising expenses are not considered a liability. Instead, they are categorized as an operating expense on the income statement. Advertising expenses represent the costs incurred to promote a company’s products or services, which are recorded in the period they are incurred. While they do affect cash flow, they do not create a future obligation like liabilities do.
When an expense is incurred but has not been paid it should be credited where?
When an expense is incurred but not yet paid, it should be credited to an "Accounts Payable" or "Accrued Expenses" account, reflecting the obligation to pay in the future. The corresponding debit should be recorded in the relevant expense account, such as "Rent Expense" or "Utilities Expense." This ensures that the financial statements accurately represent the company's liabilities and expenses in the period they were incurred.
Is it customary for the depreciation expense account and the accumulated depreciation account to be equal?
No. Accumulated depreciation is depreciation accumulated every year and it will only increase and won't decrease. Depreciation expenses is incurred every year.
Would costs incurred for advertising be considered revenue or expense?
it is considered as a deferred expense.
How does an expense increase impact the debit or credit side of the financial statement?
An increase in expenses will typically result in a debit entry on the financial statement. This means that the expense account will be debited, reflecting the increase in expenses incurred by the business.
An adjusting entry would adjust an expense account so the expense is reported when incurred?
True
Which account is not classified as a selling expense Freight-Out or Sales Salaries or Advertising Expense or Sales Discounts?
Which account is not classified as a selling expense?
Are advertising expense a liability?
No, advertising expenses are not considered a liability. Instead, they are categorized as an operating expense on the income statement. Advertising expenses represent the costs incurred to promote a company’s products or services, which are recorded in the period they are incurred. While they do affect cash flow, they do not create a future obligation like liabilities do.
Is it customary for the depreciation expense account and the accumulated depreciation account to be equal?
No. Accumulated depreciation is depreciation accumulated every year and it will only increase and won't decrease. Depreciation expenses is incurred every year.
A sole proprietor has incurred as expense out of his personal accont - what will be the journal entry?
The expense account will be debited and capital will be credited by the same ammount
Which income statement account reports how much interest was incurred during the year?
interest expense
Give you some examples of selling expense?
Selling expense is any type of expense incurred to try to sell an item. Advertising, holding fees, and the purchase price that you paid for the item are all selling expenses.
Is it true that in recording the adjusting entry for accrued taxes both accounts involved are increased?
Yes, as the expense and the corresponding liability accumulate over the period, an adjusting entry is necessary to increase the expense (with a debit) and increase the corresponding liability (with a credit).
Why does expense account require a debit entry to increase equity?
A debit to an equity account, or in this case an expense account, will increase the expense account. An increase to this account means the more expenses you have. The more expenses mean the less money you earn and therefore you make less money in your income statement because revenues - expenses = income
What is the difference between drawing account and expense account?
A Drawing account is used for withdrawals by owners of the entity. This is commonly used in sole proprietoships and partnerships. The withdrawals are the distribution of the profits to the owners. In corporations dividends declared reduce retained earnings in a similar manner because dividends are distributions of profits to the stockholders. An expense account is used for costs incurred by the entity such as salaries, depreciation, rent, interest, insurance, advertising, and taxes.
