Additional information: for electricity and water expenses, 1150 is accrued, and it is recorded as 8450 in the books. Record this information clearly in the income statement and st... Additional information: for electricity and water expenses, 1150 is accrued, and it is recorded as 8450 in the books. Record this information clearly in the income statement and statement of financial positions.
Understand the Problem
The question is asking for a clear recording of the electricity and water expenses in both the income statement and the statement of financial position, considering the different amounts recorded in the books. The accrued amount of 1150 must also be taken into account.
Answer
Record the 1150 expense and adjust the 8450 for electricity and water in financial statements.
Accumulate the electricity and water expenses of 1150 in the income statement as an expense. Adjust the recorded amount of 8450 in the books. In the financial position statement, account for any difference in the accrued liabilities.
Answer for screen readers
Accumulate the electricity and water expenses of 1150 in the income statement as an expense. Adjust the recorded amount of 8450 in the books. In the financial position statement, account for any difference in the accrued liabilities.
More Information
In accounting, it's crucial to appropriately record accrued expenses and ensure that the balance sheet accurately reflects these obligations. This ensures financial statements present a true and fair view of the company's financial position.
Tips
A common mistake is failing to adjust both the income statement and the statement of financial position, leading to inconsistencies.
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