Question

The following table contains financial information for Trumpeter Inc. before closing entries:

Cash $12,200
Supplies 6,200
Prepaid Rent 3,800
Salary Expense 4,900
Equipment 66,600
Service Revenue 29,700
Miscellaneous Expenses 20,300
Dividends 3,600
Accounts Payable 4,200
Common Stock 67,400
Retained Earnings 16,300

What is Trumpeter's net income?
$4,500

One major difference between deferral and accrual adjustments is:

Answer 1

The accrual of an Expense/Revenue occurs when an entry to the accounting is made one period before the payment it's made, it happens because the transaction it's made at a moment in time but the payment in the future, Example: Electrical consumption, it ocurrs one month before the payment, we must register the liabilities.

With deferral of an expense occurs the opposite, first the payment of service it's made but it's consumed in the future, it's registered as Pay in Advance, for example, insurance, you paid the invoice that cover 6 months from now.

Step-by-step explanation:

Net Income

Sales $29.700

Salaries Expenses -$4.900

Miscellaneous Expenses -$20.300

=================================

Net Income $4.500

Balance Sheets

Assets

Cash $12.200

Prepaid Rent $3.800

Equipment $66.600

Supplies $6.200

TOTAL ASSETS $88.800

Liabilities

Accounts Payable $4.200

TOTAL LIABILITIES $4.200

Equity

Common Stock $67.400

Retained Earnings $17.200

TOTAL EQUITY $84.600

Dividends $3.600