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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Accounts requiring adjustment

Indicate with a Yes or no whether or not each of the following accounts normally requires an adjusting entry:

  1. a. Building
  2. b. Cash
  3. c. Wages Expense
  4. d. Miscellaneous Expense
  5. e. Nancy Palmer, Capital
  6. f. Prepaid Insurance

To determine

Adjusting entries:  Adjusting entries are the journal entries which are recorded at the end of the accounting period to correct or adjust the revenue and expense accounts, to concede with the accrual principle of accounting.

To indicate: If the adjusting entries are required or not for the given accounts.

Explanation

The reason for passing of and not passing of Journal Entries are discussed below.

  • Building: Building is an asset which is recorded at the original cost on the basis of Historical cost concept; hence does not require adjusting entries.
  • Cash: Cash is recorded in the books whenever a transaction involving cash is made, hence it does not require adjusting entries.
  • Wage Expense: Wages could be accrued and paid for at a later date; hence it requires adjusting entries and needs to be adjusted to record the wage expense incurred during the current accounting period...

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