2. When should an expenditure be recorded as an asset rather than an expense? (2 criteria)...

2.	When should an expenditure be recorded as an asset rather than an expense? (2 criteria)

3.	What are three types of errors that a trial balance will NOT reveal?

4.	Explain why stockholders’ equity is affected by all revenues, expenses and dividends, but NOT by all cash receipts.

5.	If Bennington, Inc. makes a payment to another company in advance of receiving a product or service, the company receiving the money will make a journal entry to record unearned revenue. How will Bennington record that same payment on its books?

6.	Pappy Corporation receives cash of $36,000 on September 1, 2017 for one year’s rent in advance. a) What journal entry should Pappy make to record the receipt of the $36,000? b) What journal entry should Pappy make on December 31, 2017?

Expert Solution

ans 2 an expense should be recorded as asset when the expenditure is expected to generate revenue for a period which is more than one year.
the example are furniture, equipment,land etc. these assets can be depreciable or non depreciable asset. The depreciable asset is depreciated
over the useful life of assets. These are revenue generating assets.

ans 3
three tyope of errors are
1 posting to wrong accounts
2 error of amount in thebooks which are original
3 compensating errors

ans 4
advance to supplier dr
cash cr

ans 5
a
cash dr 36000
unearned rent cr 36000

b	dr	cr
unearned rent dr 36000/12x4	12000
rent revenue		12000

if any doubt please comment

ekkarill92 answered 1 year ago

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