An accountant has debited an asset account for $1,200 and credited a liability account for $500. What can be done to complete the recording of the transaction?

Question

Business

Tess Holmes

4 February, 22:36

An accountant has debited an asset account for $1,200 and credited a liability account for $500. What can be done to complete the recording of the transaction?

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Answers (1)

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Victoria Combs · Answer 1

It will certainly need to record a credit for 700

That could be an asset accounts (1)

or revenue accounts (2)

Explanation:

There are many ways to do it:

(1)

it could credit another asset.

Invenotry 1200

Account payable 500

Cash 700

the company purchase inventory (asset) It pay 700 right away and the rest later

(2)

It could credit a revenue account

cash 1,200

unarned revenue 500

sales revenue 700

The company receive cash for a customer, but only a partial amount of the job is done, so one part is earned (revenue) adn another one is not (unearned revenue)