Question

An accountant has debited an asset account for $1,200 and credited a liability account for $500. What can be done to complete the recording of the transaction?

Answer 1

Answer:

It will certainly need to record a credit for 700

That could be an asset accounts (1)

or revenue accounts (2)

Explanation:

There are many ways to do it:

(1)

it could credit another asset.

Invenotry 1200

  Account payable 500

 Cash                      700

the company purchase inventory(asset) It pay 700 right away and the rest later

(2)

It could credit a revenue account

cash 1,200

  unarned revenue 500

  sales revenue       700

The company receive cash for a customer, but only a partial amount of the job is done, so one part is earned (revenue) adn another one is not (unearned revenue)