ACC205 Week 2 Discussions and Responses.docx

I think that the manufacturing company would have

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constantly changing with the seasons and holidays that is purchased from a manufacturer. I think that the manufacturing company would have more adjusting entries and would have different accounts that a retail company, but the accounting cycle would remain the same for both. My Response Hi Mandy, I enjoyed reading your post. I liked the fact that you pointed out the seven steps in the accounting process as examining source documents, entering transactions in the journal, posting those journal
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entries to ledger accounts, constructing a trial balance, posting adjusting entries, and preparing adjusted balance. When a manufacturing company buys material for production for inventory before the sale is conducted. The retail company’s inventory has constant changes to keep up with demand, and this is purchased from the manufacturer. The manufacturer cannot log an entry of revenue until it is paid or has made a commitment of some sort. “Under the accrual basis of accounting, revenues are to be recorded when they are earned.” Wainwright, (Ed.). (2012). I think the accounting cycle could be different due to the differential of entries made, and the time of sales. Good Post! Wainwright, S.K.(Ed.). (2012). Principles of Accounting: Volume 1. Retrieved from Discussion 1 Response 2 Wendy Wrote However, the whole process will vary from company to company depending on various factors such as revenue expense and recognition. A manufacturing company will use its components to produce a finished product or raw materials for another company. The product might be produced, but, is it actually sold right away or does it spend some shelf time before it heads out the door?. As pointed out in the chapter, for manufactured product revenue, should not be recorded until the product is sold and delivered to an end customer. Payment can occur before, after, or at the time of product delivery (Wainwright, 2012, Chapter 3). My Response Wendy, You are right on point with your post, great job!! The entire process of the accounting cycles does vary from company to company depending on the different factors like revenue expense and recognition. The manufacturer maintains inventory to accommodate the buyers (retail companies), when products are sold, by either cash, or some type of contractual agreement, they absolutely cannot record the product(s) that are sold until it has been put in the hands of the buyer. “Revenues are recognized at the point of sale, whether that sale is for cash or a receivable.” Wainwright, (Ed.). (2012). Your post also explained the need for the process of account balancing before completing or creating the financial statement and what could cause unearned revenue. Again, good post!
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