ASSIGNMENT 13 - Assignment 14 Chapter 6 Page 217 checking your reading#1-13 1(a Adjusting the books are accounting changes for helping a company to

ASSIGNMENT 13 - Assignment 14 Chapter 6 Page 217 checking...

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Assignment 14 Chapter 6 Page 217 checking your reading #1-13 1. (a) Adjusting the books are accounting changes for helping a company to ensure that all accounts have correct balance. (b) It is not enough to just get the mathematic accuracy in an accounting record, we do need to do some changes to make every account correct. That is adjusting the books. (c) Company’s owners; investors; and accountants. 2. (a) Prepaid expense is asset. (b) They appear in Balance Sheet. 3. (a) That is because when every supply is used and recorded at first, it would be time-consuming and inconvenient. So we allow supplies account to be incorrect sometimes. (b) Because these two accounts provide different information and significant for the assets’ accounts. (c) In the balance sheet, the supplies account can be found. In the income statement, the supplies expense can be found. 4. (a) Prepaid insurance is current asset. (b) Insurance expense is expense. 5. Depreciation is the allocation of the cost of an asset to the fiscal period in which it is used. 6. Only the fixed asset which is not changed within a year has depreciation. 7. Depreciation account appears in the income statement; and accumulating depreciation account should appear in the balance sheet. 8. Because the depreciation is not the real amount of money when the company sells the asset, so it is not valuation. 9. Straight-line depreciation allocates the same amount of the depreciation to each fiscal period. Declining-balance depreciation allocates the same percentage in each accounting period and a greater amount of depreciation to the first year of an asset’s life. 10. The depreciation which is got by declining-balance depreciation method is called capital cost allowance . 11. For tax purpose, declining-balance depreciation method is used. 12. Contra accounts or valuation accounts are accounts those are reducing the value of assets on a balance sheet. Here is an example: Accumulate Depreciation Equipment Account is set up as a contra account of Equipment Account. 13. The principle of Materiality requires that information could affect the decision of the user of financial statement be included when the financial statement are prepared. The principle of Conservation requires that, where there are acceptable alternative accounting treatments for an item, accountants choose the one that will result in a lower net income and net asset.
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  • Winter '11
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  • Accounting, Depreciation, Grade 11 Accounting Assignment, Net Income, Accountant, Generally Accepted Accounting Principles, Owner’s Equity

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