Question

An example for adjusting entries could be ordering office supplies in April and recieving them in May. state whether the statement is true or false with reasons?

Answer 1

Solution :-

An example for adjusting entries could be ordering office supplies in April and receiving them in May - Statement is false because at the time of making purchase order in april no accounting entry is required to be passed and obligation to make payment is accrued only at the time of receipt of goods in may where below accounting entry is required to be passed -

Date of Entry	Journal	Debit	Credit
May	Office Supplies
	To Accounts Payable or Cash

Purchase order just a official confirmation from a purchaser of office supplies to a vendor to supply the goods against the order. Purchase order is a document which generally includes the purchase order number, date, name and address of the purchaser, name and address of the vendor, description and quantity of the office supplies, price, a delivery address, invoice address and payment information. Once goods are received by the purchaser than obligation to pay arises and accounting entry is required to passed in the books of accounts.