Purchase Solution

Accruals and Defferals of Company X

Not what you're looking for?

Ask Custom Question

Example 1: Accrual basis of accounting is the recognized of revenues when the sale or service occurs regardless of when actual cash is received. It recognizes expenses incurred.

Company X sells $10,000 of widgets on August 8, 2000 (recognized). Company Z pays Company X $10,000 for widgets on October 25, 2000 $10,000 (cash received).

Example 2: Deferrals occur when adjustments are made to data previously recorded in the accounts. Such adjustments occur in asset and liability accounts to expenses and revenue accounts, respectively.

Prepaid Insurance and prepaid rent are examples of assets until paid up (paid in advance); then they become expenses. These same amounts would be noted in the t accounts to prepaid insurance/insurance expense and prepaid rent/rental expense.

Attachments
Purchase this Solution
Solution Summary

Accruals and deferrals of company X are examined.

Solution Preview

Example 1:

Two Journal Entries should occur:

JE for August 8, 2000 Debit Credit
Accounts ...

Purchase this Solution
Free BrainMass Quizzes
Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Motivation

This tests some key elements of major motivation theories.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

View More Free Quizzes
Related BrainMass Solutions

  • External Funds

    the current liabilities of Accounts payable and Accruals as no external funds are required Accounts payable and accruals= 300,000 As a % of Sales this is equal to 15% Increase in Accounts payable and accruals=15% of (x-2,000,000

  • Pierce Furnishings: Raising Funds

    ratio is 60% Therefore retained income = 40 % of 5 % of x= 2 % of x Increase in assets required= 75 % of increase in sales= 75 % of (x- 2,000,000) Spontaneous liabilities = 200,000+100,000=300,000 (accruals and accounts payable) Proportion

  • AFN Formulas for Baxter Video Products

    At the end of 2007, current liabilities were $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accruals. The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 70%.

  • Sales Growth

    Also, at year-end 2004, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of account payable, and $100,000 of accruals.

  • Additional Funds Needed

    = $70,000 M = Profit margin = 15%, S1 = new sales = 400,000X1.3 = $520,000 and RR = Retention ratio = 1-payout ratio = 1-0.3 = 70% AFN = (140,000/400,000) X 120,000 - (70,000/400,000) X 120,000 - 15% X 520,000 X 70% = 42,000 - 21,000 - 54,600 =

  • Additional external capital

    The increase in assets will be the increase in sales X percentage of assets The assets will increase by 15,000,000 X (5%+15%+25%+40%) = 12,750,000 Spontaneous liabilities are accounts payable and accruals Increase in spontaneous liabilities is 15,000,000

  • Accruals and Deferrals

    222206 Accruals and Deferrals The accrual basis of accounting requires the posting of accruals and deferrals. What are these? Provide at least two examples.

  • Increase in Sales without External Funds

    Also, at year-end 2004, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accruals.

  • Income Statements and Shareholder's Equity

    Why are the appropriate accruals and deferrals necessary in determining the true income of a firm? 3. In what sense could we say that the profits of a company are an increase in net assets of a firm? 4.

View More Related Solutions