Question

Describe the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and financial statements.

-what are notes receivable?

-what are long term liabilities?

-what is the difference between permanent and temporary accounts?

Answer 1

The balances from the unadjusted trial balance are adjusted by passing the adjusting entries. Then the final balance arrived goes to the adjusted trial balances. Balance of all revenue and expense account from the adjusted trial, goes to the income statement to find out the net income. All the asset and liabilities account balances from the adjusted trial balance goes to the balance sheet to know the financial position of the business.

Note receivable : Note receivable is a promissory note received from another party who is liable to pay the amount mentioned in the note. It is an asset for the company as the sum due is receivable by the company. It may be short term or long term.

Long-term liabilities : Long-term liabilities are the financial obligations that are due more than one year in the future. These are owed by the company and the company is liable to pay for it in future. For example, long term notes payable, long term debt, etc.

The balance of permanent account are carried forward to the next financial, example asset account, liabilities account, etc. The balance of temporary account are not carried forward to the next financial year because the closing balance of these account are transferred to the income statement to obtain the net income. For example, revenue account, expense account, etc.