Monday, December 28, 2009

Prepaid Expense Journal Entries

Companies will purchase many different types purchases for types of assets that will deliver benefits throughout the year. Journal Entries will keep track of how these assets are bought and how they will be used.

This will ensure that the general accounting ledger is accurate and the accountant knows exactly what types of assets that the company actually owns/

Chart of Accounting Journal Entries:


Type of Journal Entry
Account titles
Debit
Credit
Purchase and advance payment of a short-term asset that will be used up in under a years period of time. The purchase is made with cash.

For example, prepaid rent, prepaid insurance, prepaid advertising, and supplies
Prepaid Account
Cash
Accounts Payable
XXX

XXX
XXX

Friday, December 25, 2009

Job Order Costing Multiple Choice

Answer this accounting problem related to a job order costing system. 

Assume that a company uses a job order cost system that uses pre-determined manufacturing overhead rates to calculate its manufacturing costs. In the accounting ledger, indirect materials issued into production usually are recorded as an increase in:  

Multiple Choice Answer Options:

A) Work in Process inventory (WIP)
B) Manufacturing Overhead.
C) Finished Goods Inventory Account
D) Raw Materials Inventory







Correct Answer: B

Tuesday, December 22, 2009

Process to Manage Customer Profitability

Use these steps to manage profitability:

  1. Identify the problem and uncertainties. 
  2. Obtain information. 
  3. Make predictions about the future. 
  4. Managers estimate the revenues they expect from each customer and the customer-level costs they will incur in the future.
  5. Implement the decision, evaluate performance, and learn.

Wednesday, December 16, 2009

Purchase of Equipment on Credit Journal Entry

If a company decides not to use cash to purchase equipment, it will have to finance the purchase on credit.

The following journal entry can be used:


Type of Journal Entry
Account titles
Debit
Credit
Purchase of Long Term Asset with only cash
Equipment
Accounts Payable

XXX

XXX

Thursday, December 3, 2009

Cash Equipment Purchase Journal Entry

The following can be used to record an equipment purchase that is made in all cash. This will avoid finance charges and is generally a good idea for a company that has significant cash reserves.



Type of Journal Entry
Account titles
Debit
Credit
Purchase of Long Term Asset with only cash
Equipment
Cash

XXX

XXX

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.