On June 1,Stackable,Inc

question 165

Multiple Choice

On June 1,Stackable,Inc.has a balance of $6,000 in Supplies.During June,the company buys another $2,000 of supplies.On June 30,the company counts the supplies and finds that $800 are left unused.What is the proper adjustment at June 30?

• A)Decrease Supplies and shareholders' equity by $7,200.
• B)Decrease Supplies and shareholders' equity by $8,000.
• C)Decrease Cash and increase Supplies by $2,000.
• D)Decrease Cash and increase Accounts payable by $7,200.

Understand the process and importance of recording financial transactions accurately.

Identify and correct errors that can cause a trial balance to not balance.

Explain the steps in the accounting cycle, including journalizing, posting, and preparing a trial balance.

Understand the nature, types, and treatment of accounts in accounting.

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Definitions:

Residual Value

The estimated value an asset will realize upon the conclusion of its useful life, considered in depreciation calculations.

Operating Lease Method

An accounting method for leasing whereby the lease payments are treated as an operational expense, without recording the asset and liability on the balance sheet.

Straight-Line Depreciation

An approach that spreads the expense of a physical asset across its productive lifespan in consistent yearly increments.

Capital Lease

A lease classified as a purchase by the lessee for accounting purposes, as it transfers substantially all risks and benefits of ownership.