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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

Quality Heating Company Has the Following Liabilities at Year End