Question

Adjusting entries for Best Print company involve:

a. Recognizing accounts receivable for services provided in December.
b. Delaying billing for services until January 2.
c. Reflecting accrued expenses for services rendered.

Answer 1

Adjusting entries are changes made to journal entries to reflect the accurate financial position at the end of an accounting period, including recognizing receivables, deferring billing, and accruing expenses. An example of an attentive accounting practice is stopping a payment due to a billing error, saving the company from a significant overpayment.

Step-by-step explanation:

The student's question relates to the concepts of adjusting entries in the context of accounting for Best Print Company. Adjusting entries typically involves making changes to journal entries to accurately reflect the financial position of the business at the end of an accounting period. In this scenario, the adjustments would consist of:

1. Recognizing accounts receivable for services provided in December, ensuring that revenue is recorded in the period the services were performed, even if the cash has not yet been received.
2. Delaying billing for services, which might need an adjusting entry to recognize revenue in December when the services were provided, even though billing will occur in January.
3. Reflecting accrued expenses for services rendered, which means recording expenses that have been incurred during the period but have not yet been paid or invoiced.

The anecdote involving Noel highlights the importance of vigilant accounting practices. One practical example of an adjusting entry could be stopping a payment due to a detected billing error, much like Noel's discovery of a $250,000 overpayment. By catching this error before the transaction was completed, the company was able to avoid a costly mistake.