Financial Accounting - FINANCIAL ACCOUNTING Financial...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
FINANCIAL ACCOUNTING 1 Financial Accounting Luis D. Maymí Romero University of Phoenix ACC/280 Prof. Manfredo H. Rodríguez 18:36:36
Background image of page 1

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

View Full DocumentRight Arrow Icon
1. State two generally accepted accounting principles that relate to adjusting the accounts. a. The matching principle and the revenue recognition principle. 2. 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? a. You recognize revenue when it is earned. In this case, when the work was performed in April. 3. Why do accrual-basis financial statements provide more useful information than cash-basis statements? a. Accrual basis accounting matches revenues to the time period in which they are earned and matches expenses to the time period in which they are incurred. While it is more complex than cash basis accounting, it provides much more information about your business. The accrual basis allows you to track receivables (amounts due from customers on credit sales) and payables (amounts due to vendors on credit purchases). The accrual basis allows you to match revenues to the expenses incurred in earning them, giving you more meaningful financial reports. 4.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

Financial Accounting - FINANCIAL ACCOUNTING Financial...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online