Quality Heating Company Has the Following Liabilities at Year End

question 239

Essay

Quality Heating Company has the following liabilities at year end:
$\begin{array}{lr}\text { Notes Payable } & \$ 20,000 \\\text { Accounts Payable } & 15,000 \\\text { Unearned Contract Revenue } & 9,000 \\\text { Wages Payable } & 2,900 \\\text { Interest Payable } & 700 \\\text { Income Taxes Payable } & 1,500\end{array}$
a. Which of these accounts probably was created at the end of the fiscal year as a result of an accrual? Which probably was adjusted at year end? Explain your answer.
b. Which adjustments probably reduced net income? Which probably increased net income? Explain your answers.

---

Definitions:

Factual Reports

Documents that provide information based on evidence and facts without the inclusion of personal opinions or biases.

Recommendation

Advice or suggestions offered based on analysis or expertise, intended to guide decisions or actions.

Evaluative Reports

Documents that assess the performance, value, or quality of a project, program, or employee.

Range Of Reports

The variety of documented accounts or statements covering different topics or areas of study.