Spiceland Chpt 8 Assigned Homework Solutions

Spiceland Chpt 8 Assigned Homework Solutions - Chapter 8...

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Chapter 8 Homework Solutions – Spiceland Question 8-2 In most cases, current liabilities are payable within one year and long-term liabilities are payable more than one year from now. Current liabilities are usually, but not always, due within one year. For example, if a company has an operating cycle longer than one year (a winery, for example), its current liabilities are defined by the operating cycle rather than by the length of a year. Question 8-5 The accrual basis requires expenses to be recorded when incurred. The cash basis requires expenses to be recorded when the cash is paid. Financial accounting requires use of the accrual basis rather than the cash basis as this best reflects the timing of the expense, consistent with the matching principle. Question 8-11 When a company receives cash in advance through the sale of gift certificates, it debits cash and credits a current liability account called unearned revenue. When it earns the revenue through the sale of goods or services, the company debits unearned revenue and credits revenue. Question 8-12 (a) When Sports Illustrated sells magazine subscriptions, they debit cash and credit unearned revenue. (b) As the revenue is earned through the distribution of magazines, the company debits unearned revenue and credits revenue.
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Chapter 8 Homework Solutions – Spiceland Pg. 2 Exercies 8-2 1. November 1, 2010 Debit Credit Cash 50,000 Notes Payable 50,000 (Issuance of notes payable) 2. December 31, 2010 Interest Expense ($50,000 x 6% x 2/12) 500 Interest Payable
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This note was uploaded on 10/20/2011 for the course ACC 221 taught by Professor Wiegand during the Spring '08 term at Miami University.

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Spiceland Chpt 8 Assigned Homework Solutions - Chapter 8...

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