Contractionary monetary policy Contractionary monetary policy how do you record

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Contractionary monetary policy
Contractionary monetary policy

how do you record the purchase of equipment on credit? how does revenue impact owners equity? an error in valuing inventory occurs in one year, is there an impact on income for the following is the dividends account closed out? If so, to what account? what are the normal balances of assets, liabilities & OE? what are advantages and disadvantages of organizing as a corporation? how does a deficit appear in a company's financial statements? you will be given information to calculate depreciation under various depreciation methods, and you mus compute depreciation for two consecutive years review the chapter 4 blackboard quizzes-you will have similar questions review the chapter 5,6, & 8 blackboard quizzes- you will have similar questions what re the different classes of stock ? If a corp only has one class of stock, which would it be? what accounts appear on an after closing trial balance? what is the purpose of bookkeeping? review the chapter 2 & 3 blackboard quizzes -similar questions know the GAAP principles of matching and realization what type of account is unearned revenue? prepaid expense? know how to read and use credit terms such as 2/10, n/20 how is the operating activieies section of a Statement of cash flows related to the income statementi? what is the purpose of GAAP? know how to calculate the current ratio know how to calculate CGS & GP when given sales, beginning& ending inventory and purchases what are the 4 closing entries? know how to analyze bank errors how are assets valued in the balance sheet? what is the main purpose of external auditors? know how to calculate the balance in the common stock account what happens when a corp. issues stock at a price higher than par value? how are intangible assets different from tangible assets? what does declaring dividends do to retained earnings?

Explanation / Answer

Since the question on board involves multiple questions, I would answer few of them:

Purchase of equipment on credit:

Equipment A/c Dr

To ABC Supplier A/c

(Being equipment purchased on credit from ABC)

How does revenue impacts owner's equity:

Increase in revenue does not necessarily means increase in owner's equity. Although the residual profits from the Revenue increases the owner's equity. It works in the following manner:

Revenue- Expenses= Net Profit

The amount of Net Profit earned during the period increases the owner's equity by such amount.

Error in valuing Inventory has impact on income of subsequent year.

Closing inventory of one year becomes the opening inventory of the other. Thus if there is error in valuing the inventory of one year it is certainly going to affect the income of the subsequent year.

Example:

Closing inventory of current period was overvalued.

Thus it is evident that opening inventory of the subsequent period was also overvalued .As a result of which income of the subsequent year stands reduced.

Normal Balance of Asset- Debit Balance

Liab- Credit Balance

OE- Credit Balance

Deficit in company's Financial statement: When the Expenses are more than a incomes of a particular period, it thereby reflects that the company is running into losses, which is reflected by deficit in Financial statements.

Different Depreciation Methods:

There are popularly two methods: Written Down Value (WDV) & Straight Line Method (SLM)

In WDV : depreciation is charged on reducing balances.

In SLM: Fixed Amount of Depreciation is deducted by calculating a rate of Depreciation

Different Classes of Stock:

Debt, Equity

If company has only one class ...it must be equity

Purpose of Bookkeeping:

To record day to day financial transactions so that conclusions can be drawn .

Please give your feedback. Happy Learning!! :)

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