Question

On the last day of the fiscal year, a co-worker asks you to cut a check for $2,000 as a miscellaneous expense for supplies in order to complete a project for a VIP customer today. You notice the invoice looks a little different from other invoices that are usually processed. You know that by preparing the closing entries tomorrow, the miscellaneous expense will be set to zero for the beginning of the year. Should you write this check today and record the expense or write the check tomorrow? How would the company be affected if the check is written and the invoice ends up being erroneous?

Answer 1

Answer:

a)

We should not write the check today ,the check make become secure to write it tomorrow.

According to accounting rules, While entering the exchanges/transactions there ought to be Debit and Credit all the while. Subsequently on the off chance that I cut a check today for miscellaneous cost for supplies, at that point it ought to be debited by Miscellaneous expense a/c and Credited by bank a/c at the same time. In other case, present year net income wrongly shows $2,000 higher.

b)

As per Invoice is appearing to be unique then it ought not be paid and a some sort of excuse ought to be make.

Affect of the organization on the off chance that the check cut today and didn't record the cost, at that point the net gain of the present fiscal year will be expanded by $2,000 and net gain/net income of the following year will be diminished by $2,000. It occurs because of mistake.

In the event that check cut today and cost recorded tomorrow, at that point the current year fiscal statement shows $2,000 higher net gain and the sum to be balance sheet will be diminished by $2,000.