Statement 1: The “Shipment to Branch” account is added to the home office’s purchase account in determining home office cost of goods sold. Statement 2: When performing the end-of-the-period reconciliation between the Home Office account on the branch’s books and the Branch Account on the home office’s books, shipments in transit from the branch back to the home office will be treated as an addition to the home office’s Branch Account. Statement 3: The balance of the Allowance for overvaluation of inventories: Branch ledger account is added from the balance of the Investment in Branch account in the separate balance sheet of the home office. Statement 4: If branch managers are responsible for ordering merchandise from the home office any excess freight costs incurred as a result of inter-branch shipments are absorbed by the appropriate branch rather than by the home office. Statement 5: The acquisition-related costs in a business combination to be expensed immediately include cost of issuing debt securities. Statement 6: In a business combination any “gain on bargain purchase” shall be recognized in other comprehensive income. Which statements are true?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Statement 1: The “Shipment to Branch” account is added to the home office’s purchase account in determining home office cost of goods sold.
Statement 2: When performing the end-of-the-period reconciliation between the Home Office account on the branch’s books and the Branch Account on the home office’s books, shipments in transit from the branch back to the home office will be treated as an addition to the home office’s Branch Account.
Statement 3: The balance of the Allowance for overvaluation of inventories: Branch ledger account is added from the balance of the Investment in Branch account in the separate balance sheet of the home office.
Statement 4: If branch managers are responsible for ordering merchandise from the home office any excess freight costs incurred as a result of inter-branch shipments are absorbed by the appropriate branch rather than by the home office.
Statement 5: The acquisition-related costs in a business combination to be expensed immediately include cost of issuing debt securities.
Statement 6: In a business combination any “gain on bargain purchase” shall be recognized in other comprehensive income.
Which statements are true?
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