Question

Describe the significance of each of the following:

1) Depreciation

2) Accrued Wages

3) The Adjusting Entry for Supplies

4) The Ten- Column Worksheet

5) Closing Entries

Answer 1

1.Depreciation-Following are the significance of depreciation:

a.Its used for calculating net profit or loss arises from business.

b.For calculating actual income tax liablity of organisation.

c.For presentation of true financial position of business that means for ascertaining value of assets and liablity.

d.To calculate actual cost of production.

e.Used for provision of funds and replacement of assets.

2.Accrued wages refers to the amount of liability remain  for wages at the end of accounting period which is earned by hourly employees but not yet paid to them.Following are the significance of Accrued wages:

a.It record entire wage expenses of organisation.

b.it explain actual wages liablity of organisation which should be paid in accounting period.

3.The Adjusting Entry for Supplies has following significance:

a.Its help in preparing actual income statement by adjustment entries in supplies.

b.Its help in preparing correct financial statement of organisation.

4.The Ten Column Worksheet:The Ten-column worksheet is to help eliminate errors which is created due to  complications involved in identifying, calculating and correctly allocating the journal entries required in the end-of-period adjustment process.That means double entry book keeping error is eliminated by The Ten Column Worksheet.

5.Closing Entries-Following are the significance of closing entries:

a.To close the account balances of nominal accounts.

b.To give actual figure of owner capital.