Question

Dawson Company uses accrual accounting and issues monthly financial statements. On September 25, 2020, Dawson Company bills customers for services provided in September. As a result of this event, Dawson Company’s

            a. required accounting entry on September 25 results in an increase in      stockholders’ equity.

            b. required adjusting entry on September 30 results in an increase in stockholders’ equity.

            c. required accounting entry on September 25 results in an increase in    liabilities.

            d. Dawson Company does not need to prepare any accounting entries until the company collects cash from the customers.

Answer 1

Answer:

a. required accounting entry on September 25 results in an increase in stockholders’ equity

Explanation:

As per Accrual accounting,

Dawson Company Should required to prepare accounting Entry on September 25 as Follows,

• Debited to Accounts receivable and
• Credited to Revenue account

It results in an Increase in stockholders' equity since revenue has been increased.

Therefore,

Required accounting entry on September 25 results in an increase in stockholders’ equity.

Thus, Option a is correct.

Explanatnio for other optoins being incorrect:

It does not required adjusting entry transaction not made at end of the period. So. Option b is incorrect.

It increases assets not liabilities. So, Option c is incorrect.

It required to prepare entry on September 25. So Option d is incorrect.