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Chapter 4 Homework - Chapter 4 Assignments(this portion is...

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Chapter 4 Assignments (this portion is not included in the Group Assignment) Questions (1,3,13,15) 1.) Briefly explain the purposes of adjustments: Adjustments are needed to ensure> Revenues are recorded when earned (the revenue principle) Expenses are recorded when incurred to generate revenues (the matching principle) Assets are reported at amounts representing the economic benefits that remain at the end of the current period Liabilites are reported at amounts owed at the end of the current period that will require a future sacrifice of resources 3.) List 2 types of Adjustments and give an example of an adjustment affecting revenues and expenses for each type. Deferrals and Accruals 13.) What’s the purpose of closing journal entries? The closing process serves 2 purposes:
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1. Transfer NET INCOME (or loss) and Dividends to Retained Earnings. After the closing journal entries are prepared and posted, the balance in the Retained Earnings account will agree with the statement of retained earnings and the balance sheet. 2. Establish ZERO balanced in all income statement and dividend accounts. After the closing journal entries are prepared and posted, the balanced in the temporary accounts are reset to zero to start accumulating next year’s results. 15.) Why are the income statement accounts closed, but the balance sheet accounts are not? The income statement is the temporary home for revenue and expense accounts, and Retained Earnings in the stockholders’ equity section of the balance sheet is their permanent home.
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Rachel L. Gates Arlene Van Dort Rachael Hernandez Jashira Ellis ACC-240 Chapter 4 GROUP-WORK Assignment E4-4 Recording Adjusting Journal Entries Req.1.
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