Reasons for the Inventory account requiring adjustment at year-end. These accounts require adjustment at the year-end since they may be incorrect due to various reasons such as recording errors, theft or waste. Merchandisers who use perpetual systems need additional adjustments for the purpose of making records agree with actual inventories at hand.
The distinct features of an income statement for a merchandising company.
The distinguishing features are a sales revenues section, a cost of goods sold section and gross profit.
The difference between an account receivable and a note receivable.
Receivable are funds which an entity is owned by others and its counting on collecting. Receivables are termed as assets of a company due to the fact that they are items of future value (Averkamp, 2016). The different between the two is that account receivables are as a result of the company selling goods or carry out a service and then billing the payment later while notes receivables are balances due on promissory notes.
The difference between the two methods that may be used in estimating uncollectible account
The two methods include the allowance method and the direct write-off method. The direct write-off method involves a particular account which is determined to be uncollectible, the loss is grouped as a bad debt expense (Home - principlesofaccounting.com, 2018). In the case of the allowable method, it involves the estimation of uncollectible accounts at the end a specific time.
Explanation of a current liability
Current (or short-term) liabilities are kinds of liabilities which are required to be settled within one year of a company’s balance sheet (Accounting for Management - Explanations, Exercises, Problems and Calculators, 2012). These obligations require the utilization of a current asset or will create another current liability. They are due within the operating cycle of a company.
Examples of common current liability accounts
These can be stated as Short-term notes payable, short-term debt payables, accounts payable, dividends payable, current tax payable, interest payable, accrued expenses, salaries payable, current lease liability
References
Accounting for Management - Explanations, Exercises, Problems, and Calculators. (2012). Accounting for Management. Retrieved 6 March 2018, from https://www.accountingformanagement.org/
Averkamp, H. (2016). Accounting coach. URL www. accountingcoach. com.
Home - principlesofaccounting.com. (2018). principlesofaccounting.com. Retrieved 6 March 2018, from http://www.principlesofaccounting.com/
