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Prior period adjustments are reported as an adjustment to which account?
Prior period adjustments are reported as an adjustment to the retained earnings account in the statement of retained earnings. This is done to correct errors in the financial statements that occurred in previous periods.
When a purchase return and allowance becomes a contra account?
A purchase return and allowance account becomes a contra account when it is used to offset the total purchases in financial statements. This occurs when a business records returns of goods purchased or allowances granted to customers, effectively reducing the overall purchase expense. By classifying it as a contra account, it provides a clearer picture of net purchases, allowing for more accurate financial reporting. The balance in this account is subtracted from total purchases to arrive at net purchases for the accounting period.
What part of balance sheet is allowance for doubtful accounts reported?
The allowance for doubtful accounts is a reduction to the accounts receivable. This is a contra account, similar to accumulated depreciation.
Can you provide an example of how accounting for stock options impacts a company's financial statements?
When a company grants stock options to employees, it must account for this as an expense on its financial statements. This expense reduces the company's reported net income and earnings per share, which can affect how investors perceive the company's profitability.
What is the function of the account officer?
To ensure that financial events are accurately and appropriately recorded in the company's financial and or financial statements.
Which financial statements include significant accounting estimates?
It is important to know which financial statements are being referred to in order to know which include significant account estimates. Providing the statements would be helpful.
What are the financial statements of business organization?
The profit and loss account, the cash flow account and the balance sheet
What is allowance for probable losses?
Allowance for probable losses is an accounting estimate that reflects the anticipated losses on accounts receivable or other assets due to factors such as defaults or non-collection. This allowance is created to match potential losses with the revenue they relate to, thus ensuring that financial statements accurately represent a company's financial position. It is recorded as a contra asset account, reducing the total value of receivables on the balance sheet. This practice helps provide a more realistic view of expected cash flows and financial health.
What type of account is accumulated depreciation and how is it reported in the financial statements?
Accumulated depreciation is a contra-asset account and show in the asset section of the Balance Sheet. It is called contra-asset account because contrary to any asset account Acc. Dep. is a credit type of account. The offset of Accumulated depreciation is to Debit the expense account Depreciation.
How do I know if I have a retirement account?
You can know if you have a retirement account by checking your financial statements or contacting your employer or financial institution to inquire about any retirement accounts in your name.
How do I find my IRA account information?
To find your IRA account information, you can check your account statements, contact your financial institution, or log in to your online account if you have one.
Why are control account balances reportedd in external financial statements while subsidiary accounts balances are not are subsidiary accounts useful to anyone?
A control account is a summary account in the general ledger. The details that support the balance in the summary account are contained in a subsidiary ledger. The purpose of the control account is to keep the general ledger free of details, yet have the correct balance for the financial statements. The details on each customer and each transaction are recorded in the subsidiary account. Hence, subsidiary account balances are not reported in financial statements because it is not necessary to see the details for every sale or every collection transaction. Yes, subsidiary account balances are useful to the sales manager and the credit manager who will need to know detailed information on individual customers, including whether a customer recently reduced their account balance.
