Answer:
1. Inventory account will be affected and assertions of accuracy and valuation will be violated.
2. Assets are overstated and assertion classification is violated.
3. Liability is understated and assertions of accuracy is violated.
4. No impact.
Explanation:
Assertions are certain claims of a business which a business must fulfill in order to make its financial statements reliable. A company has to record the expense when it is incurred in order to provide accuracy in valuation. In the given cases the assertions are violated which impact business accounts.
Answer:
Cost of goods sold = $8,800
Explanation:
<em>The cost of goods is represents amount incurred to make available what has been sold. It is computed as follows:</em>
<em>Cost of goods sold = opening stock + purchases - closing inventory</em>
It is useful to determine the cost of goods so as to calculate the gross profit margin. The gross profit is the sales revenue less cost of goods sold.
So we can compute same for the sporting equipment store as follows:
Cost of goods sold = 3,800 + 7,800 - 2,800
= $8,800
Cost of goods sold = $8,800
Answer:
Explanation:
Failure of credit customers to pay their bills is considered a bad debt in Accounting. This is recored as a bad debt expense in journal entries in the <em>period when the credit sale occurred</em>. This ensures that these bad debt expense matches the revenues earned during that period. In a company's financial statements, bad debt expense is recorded in the Income statement as <em>selling expenses.</em>
Answer:
$55,500
Explanation:
The computation of the net realizable value after the write off entry is show below:
The credit balance in allowance with terms to bad debts is
= $4,500 - $4,000
= $500
Now the net realizable value is
= ($60,000 - $4,000) - ($4,500 - $4,000)
= $56,000 - $500
= $55,500
Hence, the same is to be considered
This means that money is never circulated