Why do we record hair care supplies as an asset when received, but record office supplies...

Why do we record hair care supplies as an asset when received, but record office supplies as an expense when received?

If we record hair care supplies as an expense instead when received, how will that change the related adjusting journal entry? Will my net income be correct anyway?

Expert Solution

ekkarill92 answered 2 years ago

Hair Care Inc. is a wholesaler of hair supplies. Hair Care uses a perpetual inventory system....

Hair Care Inc. is a wholesaler of hair supplies. Hair Care uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $29,197) $ 51,600 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition), for cash refund (original cost of merchandise $400) 640 c. Sold merchandise (costing $4,950) to a customer, on account with terms 3/10, n/30 10,000 d. Collected half of the balance owed by...

when a vendor invoice is received for office supplies, the following entry is recorded: a. Debit-...

when a vendor invoice is received for office supplies, the following entry is recorded: a. Debit- accounts payable, credit- office supplies b. Debit- retained earnings, credit- office supplies c. Debit- office supplies, credit- accounts payable d. Debit- office supplies, credit accounts receivable.

Think about office supplies. What is the right accounting approach to record purchases of office supplies...

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When evaluating financial statements, why do we care about the industry? Why is this part of...

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Why don't we record gains under the exception to fair value method? When we record a...

Why don't we record gains under the exception to fair value method? When we record a non-monetary exchange that lacks commercial substance, we use the carrying amount of the old asset plus any cash consideration for the value of the new asset. Why don't we record gains or losses under this method? My prof says we never record gains but sometimes we record losses if the deal wasn't fair. Why?

1) Under accrual basis accounting, we record revenue when ________. A) cash is received from customers...

1) Under accrual basis accounting, we record revenue when ________. A) cash is received from customers B) cash is received for any reason C) it meets the criteria for revenue recognition D) a company receives cash from a customer on account 2) Under accrual basis accounting, we record expenses when ________. A) a company pays cash to a supplier B) a company incurs a liability C) a company uses resources D) a company pays cash to anyone 3) Which of...

Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the...

Wig Creations Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Wig Creations prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 20Y1: Days Past Due Customer Balance Not Past Due 1-30 31-60 61-90 91-120 over 120 Subtotals 660,200 366,500 158,400 72,600 24,400 21,800 16,500 The following accounts were unintentionally omitted from the aging schedule: Customer Due Date Balance Arcade...

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Why do we record hair care supplies as an asset when received, but record office supplies...

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