BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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₱10, 700 debit to prepaid supplies
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₱1, 800 credit to supplies expense
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₱1, 800 debit to prepaid supplies
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₱10, 700 debit to supplies expense
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Detailed explanation-1: -Adjustments for prepaid expenses As you use the prepaid item, decrease your Prepaid Expense account and increase your actual Expense account. To do this, debit your Expense account and credit your Prepaid Expense account. This creates a prepaid expense adjusting entry.
Detailed explanation-2: -Answer and Explanation: Explanation: A purchase of supplies on account is recorded as a debit to supplies expense and a credit to accounts payable.
Detailed explanation-3: -When an owner draws $5, 000 from a sole proprietorship or when a corporation declares and pays a $5, 000 dividend, the asset Cash decreases by $5, 000. What is the other effect on the balance sheet? Owner’s/Stockholders’ Equity will decrease-keeping the accounting equation and the balance sheet in balance.
Detailed explanation-4: -Answer and Explanation: The payment of cash increases the asset account Cash by $300 and the $200 of credit increases Accounts Receivable by $200.