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CMA Foundation · Fundamentals of Financial and Cost Accounting · Adjustment Entries and Rectification of Errors

Which of the following is NOT a typical adjusting entry at the year end?

Recording a cash purchase of furniture is not an adjusting entry, because it is an ordinary transaction journalised when it happens. Depreciation, outstanding wages and provision for doubtful debts are passed at year end to match expenses with the period.

  1. AProviding depreciation on machinery
  2. BRecording outstanding wages
  3. CRecording the purchase of furniture for cash during the yearCorrect
  4. DCreating a provision for doubtful debts

Explanation

A cash purchase of furniture is a normal transaction recorded in the journal on the date it occurs, so no year-end adjustment is needed. Depreciation, outstanding expenses and provisions are year-end adjustments needed for matching.

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