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Unformatted text preview: Young Suk Choi (24808709) Seat: D7 MGMT 30A Questions 3. Tony Galego, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Galego's law firm prepares monthly financial statements, when should it recognize revenue from this engagement? Why? a. It should be recognized in May because Galego didnt receive money until May so it should be noted in May when they are paid 10. Explain the differences between depreciation expense and accumulated depreciation. a. Usually depreciation expense noted on Debit side and accumulated depreciation noted on credit side. The difference between these two is that as depreciation means the process of allocating the cost of an asset to expense over is useful life, depreciation expense means the expense of deprecation of goods, and accumulated depreciation means that total amount of depreciation of good. Brief Exercises 4-1 Identify the effect, if any, that each of the following transactions would have upon cash and net income. The first transaction has been completed as an example. Cash Net Income (a) Purchased $100 of supplies for cash. $100 $ 0 (b ) Recorded an adjusting entry to record use of $30 of the above supplies.-$30 (c) Made sales of $1,300, all on account. $1,300 (d ) Received $800 from customers in payment of their accounts. $800 $800 (e) Purchased capital asset for cash, $2,500.-$2,500 (f) Recorded depreciation of building for period used, $600.-$1,250 BE4-13. Using the data in BE4-12, identify the accounts that would be included in a post-closing trial balance. Hint: Identify post-closing trial balance accounts. (SO 7) - The lists that should be on the post-closing trial balance are accumulated Depreciation, Service Revenue, Depreciation Expense, supplies, and accounts payable. BE4-14. The required steps in the accounting cycle are listed in random order below. List the steps in proper sequence. a. Prepare a post-closing trial balance. - b. Prepare an adjusted trial balance. - c. Analyze business transactions. - d. Prepare a trial balance. - e. Journalize the transactions. - f. Journalize and post closing entries. -f....
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- Winter '08