For the purpose of completing the assignment, which of the following options describe the correct functions to use when recording the transactions below?
1. We sell goods to customers in cash
2. Based on a physical count at the end of the period, we need to write down inventories
3. We make a payment for a one-year insurance premium, starting next month
Group of answer choices
Receive money; Depreciation under 'fixed assets'; Spend money
Receive money; Inventory adjustment under 'product and services'; Spend money
Receive money; Inventory adjustment under 'product and services'; Manual entry
Bills; Inventory adjustment under 'product and services't; Spend money
When recording the transactions, the correct functions to use are:
- For selling goods to customers in cash:
-
Receive money: This would involve recording the receipt of cash from the customer, debiting cash or bank account and crediting sales revenue.
-
Based on a physical count, writing down inventories:
-
Inventory adjustment under 'product and services': This would require adjusting the inventory account to reflect the lower value, debiting the cost of goods sold and crediting the inventory account.
-
Making a payment for a one-year insurance premium starting next month:
- Spend money: This would involve recording the prepaid expense, debiting prepaid insurance and crediting cash or bank account.
So, the correct option would be: Receive money; Inventory adjustment under 'product and services'; Spend money
