Accounting: Earnings and Merchandising Company
п»їPlease interact to all of the pursuing prompts in the class discussion area of your online study course: This week you learned about the unearned income account. Offer three samples of unearned income. Answer: 3 examples of unearned revenue would be 1 . Prepaid Expense -- A year lengthy insurance deal a company paid $12, 000 for at the start of the year. Because the insurance company is in debt for the company assistance, the expense prepayment is documented as a property Journal Entries: debit Pre-paid Insurance and credit Cash). 2 . Unearned Revenue - A year long subscription of $12, 000 is received in advance with a magazine business. Because the company owes a thing, the unearned revenue is usually recorded as a liability. three or more. Non-cash: These types of adjusting entries record non-cash items just like depreciation price, allowance for doubtful debt etc .
So what do you think the biggest differences will be between accounting for a service-based business and a merchandise-based business? Response: Various costs are received by both merchandising and service businesses. Both may well hire staff as well as require accountants, equally may need products in order to be in operation, both types of organization structures possess customers who have pay for goods or services. The main difference between a merchandising company and a service industry company however , is usually that the merchandising business must stock inventory. As well, There are other ways in how the two cash flow statements are ready. How might these distinctions impact the approach to doing a work sheet and making necessary adjustments? Answer: One example is: the income statement (also known as P& L) of the merchandising firm consists of Income, Expenses (related to the sales volume throughout the Cost of Merchandise Sold (COGS) and Basic & Administrative Expense (G& SA), which will all lead to Net Income. The income assertion of a Service provider consists of Assistance Revenue without any Bills related to that service, resulting in Net Income