Using the Following Information, List the Items That Will Require

question 25

Essay

Using the following information, list the items that will require adjustments to the accounts of Salem Co.Also, indicate which accounts will increase or decrease due to the adjustment.
(a)The bank statement balance is $2,597.
(b)The cash account balance is $2,680.
(c)Outstanding checks amounted to $703.
(d)Deposits in transit are $732.
(e)The bank service charge is $25.
(f)Interest added to the checking account by the bank is $7.
(g)A check drawn for $59 was incorrectly charged by the bank as $95.

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Definitions:

Variable Expense Ratio

A ratio computed by dividing variable expenses by sales.

Operating Leverage

A financial concept that measures the proportion of fixed costs in a company's cost structure, indicating its sensitivity to changes in sales volume.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.

Net Operating Income

A measure of the profitability of a business's core operational activities, excluding any income or expenses not directly related to its main operations.