CHAPTER 4 - CHAPTER 4 Accrual Accounting Concepts Study Objectives 1 2 3 4 5 6 7 8 Explain the revenue recognition principle and the matching principle

CHAPTER 4 - CHAPTER 4 Accrual Accounting Concepts Study...

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CHAPTER 4 Accrual Accounting Concepts Study Objectives 1.Explain the revenue recognition principle and the matching principle. 2. Differentiate between the cash basis and the accrual basis of accounting. 3.Explain why adjusting entries are needed, and identify the major types of adjusting entries. 4. Prepare adjusting entries for prepayments. 5. Prepare adjusting entries for accruals. 6.Describe the nature and purpose of the adjusted trial balance. 7.Explain the purpose of closing entries. 8.Describe the required steps in the accounting cycle. 1. 1 C 8. 4 K 15. 5 C 22. 6 C 29. 7 K 2. 1 K 9. 4 C 16. 5 K 23. 2 C 30. 8 K 3. 1 C 10. 4 C 17. 5 AN 24. 6 C 31. 8 K 4. 1 AP 11. 4 K 18. 5 AP 25. 7 K 32. 8 C 5. 3 C 12. 4 K 19. 5 K 26. 7 C 33. 8 C 6. 3 C 13. 1 C 20. 5 K 27. 7 C 34. 9* K 7. 3 C 14. 1 AN 21. 5 C 28. 7 K 35. 9* K Brief Exercises 1. 2 C 4. 4 AP 7. 4 AP 10. 6 AP 13. 7 K 2. 3 C 5. 4 AP 8. 5 AP 11. 6 AP 14. 8 K 3. 3 AN 6. 4 AP 9. 6 AN 12. 6 K Exercises 1. 1 C 5. 2 AP 9. 4, 5 AP 13. 1, 4, 5, 6 AN 16. 6 AP 2. 1 K 6. 2, 4, 5 AP 10. 4, 5 AP 14. 4, 5, 6 AN 17. 7 AP 3. 1 C 7. 2, 3 C 11. 4, 5 AP 15. 4, 5, 6 AP 4. 2, 4, 5 AP 8. 3, 4, 5 AN 12. 1, 4, 5, 6 AP Problems: Set A 1. 2, 4 AP 3. 4, 5, 6, 7 AP 5. 4, 5 AP 7. 4, 5, 6 AP 8. 4, 5, 6, 7, 8 AP 2. 4, 5, 6 AP 4. 4, 5, 6, 7 AP 6. 4, 5 AN Problems: Set B 1. 2, 4 AP 3. 4, 5, 6, 7 AP 5. 4, 5 AP 7. 4, 5, 6 AP 8. 4, 5, 6, 7, 8 AP 2. 4, 5, 6 AP 4. 4, 5, 6, 7 AP 6. 4, 5 AN 4-1
ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Record transactions on accrual basis; convert revenue to cash receipts. Simple 20–30 2A Prepare adjusting entries, post to ledger accounts, and prepare an adjusted trial balance. Simple 40–50 3A Prepare adjusting entries, adjusted trial balance, and financial statements. Simple 50–60 4A Prepare adjusting entries and financial statements; identify accounts to be closed. Moderate 40–50 5A Prepare adjusting entries. Moderate 30–40 6A Prepare adjusting entries and a corrected income statement. Moderate 30–40 7A Journalize transactions and follow through accounting cycle to preparation of financial statements. Moderate 60–70 8A Complete all steps in accounting cycle. Moderate 70–80 1B Record transactions on accrual basis; convert revenue to cash receipts. Simple 20–30 2B Prepare adjusting entries, post to ledger accounts, and prepare adjusted trial balance. Simple 40–50 3B Prepare adjusting entries, adjusted trial balance, and financial statements. Simple 50–60 4B Prepare adjusting entries and financial statements; identify accounts to be closed. Moderate 40–50 5B Prepare adjusting entries. Moderate 30–40 6B Prepare adjusting entries and a corrected income statement. Moderate 30–40 7B Journalize transactions and follow through accounting cycle to preparation of financial statements.

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