Question

5. At the end of the October, XYZ Corp. owes employee wages of $750, but hasn't paid them (they will be paid in Nov.) a. What should be recorded to the accounting equation to account for the wages that are owed? Assets Liabilities Equity b. If the above transaction is not recorded at the end of the month, October expenses will be liabilities will be and net income will be (indicate understated or overstated for all three) 6. On March 15, Smart Inc. paid $1,200 for a one-year insurance policy that starts on April 1. a. What should be recorded to the accounting equation on March 15? Assets Liabilities Equity b. What adjustment should be recorded to the accounting equation to properly state the accounts at April 30? Assets Liabilities Equity C. If the above transaction is not recorded at the end of the month, April expenses will be assets will be and net income will be (indicate understated or overstated for all three)

Answer 1

5 a.

Assets	Liabilities	Equity
	750	-750
	(Salaries payable)	(Salaries expense)

5 b.

expenses will be understated

liabilities will be understated

net income will be overstated

.

6 a.

Assets	Liabilities	Equity
Prepaid insurance 1,200
Cash -1,200

6 b.

Assets	Liabilities	Equity
Prepaid insurance - 100		Insurance expense - 100

6 c.

expenses will be understated

assets will be overstated

net income will be overstated