These types of accounts have the opposite accounting effect on your books than bank (or asset) accounts do. Because of this, the Bank Balance column for these accounts will normally be negative. What you want to look at is the Balance column and make sure that is correct (positive). However, the business enterprise will record… Continue reading Solved: Why would the Bank Balance be different than the Register Balance after a successful Reconciliation?
Month: February 2022
Adjusting Entry for Prepaid Expense
Therefore, an adjusting entry must be recorded as of December 31 to credit Prepaid Expenses for $1,000 and to debit Insurance Expense for $1,000. For example, assume ABC Company purchases insurance for the upcoming twelve month period. ABC Company will initially book the full $120,000 as a debit to prepaid insurance, an asset on the… Continue reading Adjusting Entry for Prepaid Expense
Operating Profit vs Net Income: What’re the Differences?
Many things can affect operating income, like labor costs, prices of materials, and pricing strategy. And because these items relate directly to a business’s day-to-day operations, operating income can help business owners make strategic decisions about how to grow operating income vs net income or where changes are needed. Net Income is the profit remaining… Continue reading Operating Profit vs Net Income: What’re the Differences?