Week 3 assignments

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

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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 has earned but for which it has not received the cash and does not match expenses with earned
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This note was uploaded on 06/26/2011 for the course ACC 280 taught by Professor Himmle during the Spring '09 term at University of Phoenix.

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

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