Question

Gary did a job last week that he will be paid $10,000 in the next calendar...

Gary did a job last week that he will be paid $10,000 in the next calendar year. Which financial statement should we record the $10,000 on for Ermias?

a

Income and Expense Statement

b

Budget

c

Balance Sheet

d

Statement of Mandatory Billings

Homework Answers

Answer #1

Option C is correct: Balance Sheet

Ermias is liable to pay $10,000 to Gary in the next calendar year. So, Ermias should record this under liability section of the balance sheet.

Option a is incorrect because if the $10,000 is already paid to Gary, then Ermias would record this in Income and Expense Statement

Option b is incorrect because in Budget statement only the expenses that Ermias might incur in future is recorded

Option d is incorrect because the Statement of Mandatory Billings is for customers

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