Chapter Exercises week3

Chapter Exercises week3 - Chapter Exercises 2. State two...

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Chapter Exercises 2. State two generally accepted accounting principles that relate to adjusting the accounts. a) revenue recognition principle b) matching principle 3. Rick Marsh, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Marsh’s law firm prepares monthly financial statements, when should it recognize revenue from this engagement? Why? According to the revenue recognition principle, the revenue was earned in April. Therefore, the revenue should be recognized on the April balance sheets. 4. Why do accrual-basis financial statements provide more useful information than cash-basis statements? The cash basis fails to record revenue that has been earned but not received, and it does not match expenses with earned revenues, this leads to misleading financial statements. 8. Distinguish between the two categories of adjusting entries, and identify the types of adjustments applicable to each category. Deferrals accruals Prepaid expenses accrued revenues Unearned revenue accrued expenses E3-7 The ledger of Piper Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Debit
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This note was uploaded on 03/21/2011 for the course ACC 280 taught by Professor Himmle during the Spring '09 term at University of Phoenix.

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Chapter Exercises week3 - Chapter Exercises 2. State two...

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