Final answer:
The statement about Smart Touch Learning's accounting transaction is B. False because when paying an account payable, Accounts Payable should be debited and Cash should be credited. The accounting profit for the firm with given expenses and revenue is $50,000.
Step-by-step explanation:
When Smart Touch Learning makes a payment of $300 on account for office supplies previously purchased, the correct accounting transaction would involve debiting the Accounts Payable account and crediting the Cash account. This is because Accounts Payable is a liability account representing what the business owes to suppliers and is decreased on the debit side. Conversely, Cash is an asset that is reduced because the company is paying out money, so it is credited. Therefore, the statement given is False.
Bringing a real-world scenario into context, imagine a situation like what Noel experienced. Noel's alertness in spotting an overpayment on an equipment bill saved the company from making a costly mistake. Quick communication using email and Slack helped to put a stop to the payment until the discrepancy was resolved. This emphasizes the importance of meticulous financial oversight and the responsiveness of the accounts department.
In response to the self-check question, the firm's accounting profit is calculated by subtracting the total expenses from the sales revenue. In this case, the accounting profit would be:
- Sales Revenue: $1,000,000
- Total Expenses (Labor $600,000 + Capital $150,000 + Materials $200,000): $950,000
- Accounting Profit (Sales Revenue - Total Expenses): $1,000,000 - $950,000 = $50,000