Each of the Following Transactions for Morrison Company Requires an Adjusting

question 6

Essay

Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted, will overstate or understate assets, liabilities, stockholders' equity, revenues, expenses, or net income. Indicate the amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-) for understate, and (NE) for no effect.
1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand.
2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years of insurance.
3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months rent.

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Definitions:

Team Creativity

The process and outcome of generating novel and useful ideas and solutions through the collaborative efforts of a group or team.

Electronic Brainstorming

A group creativity technique using digital tools to generate ideas, where participants contribute their ideas electronically and anonymously to foster innovation.

Upper Echelon Theory

A theory suggesting that an organization's outcomes are influenced by the personal backgrounds and characteristics of its top executives.

Organizational Characteristics

Traits or attributes that define the nature of an organization, including its size, structure, processes, culture, and goals.