{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Week 3 assignments - Individual Assignment Ch 3 Textbook...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Individual Assignment: Ch. 3 Textbook Exercises 2. State two generally accepted accounting principles that relate to adjusting the accounts. Adjusting entries ensure that the revenue recognition and matching principles are followed. 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? It should use the accrual basis, and record it in the period in which the events occur. For example, the law firm should recognize revenues when earned (rather than when they receive cash), it also means recognizing expenses when incurred (rather than when paid ). 4. Why do accrual-basis financial statements provide more useful information than cash-basis statements? Accrual-basis financial statements provide more useful information than cash basis. Cash-basis often produces misleading financial statements, because it fails to record revenue that a company
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}