ACC 225 WEEK 3 CHECKPOINT - ADJUSTMENTS AND ACCRUAL AND CASH BASIS ACCOUNTING

ACC 225 WEEK 3 CHECKPOINT - ADJUSTMENTS AND ACCRUAL AND CASH BASIS ACCOUNTING

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Week 3 CheckPoint: Adjustments and Accrual and Cash Basis Accounting · Resource: Fundamental Accounting Principles, pp. 116-118 and 120 · Due Date: Day 5 [Individual] forum · Complete Quick Study questions QS 3-1 and QS 3-9 on pp. 116 and 117 and Exercises 3-1 and 3-7 on pp. 118 and 120. · Post your answers as an attachment.
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Quick Study 3-1 a. UR Unearned revenue b. PE Prepaid expenses (Depreciation) c. AE Accrued expenses d. AR Accrued revenue e. PE Prepaid expenses Quick Study 3-9 Cash Accounting: Revenues (cash receipts) $33,000 Expenses (cash payments: $22,500 - $2,250 + $3,750) 24,000 Net income $ 9,000 Accrual Accounting: Revenues (earned) $39,000 Expenses (incurred) 22,500 Net income $16,500 Exercise 3-1 (15 minutes) 1. B. 4. F 2. E. 5. D 3. C. 6. A. Exercise 3-7 Balance
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Unformatted text preview: Sheet Insuran ce Asset using Insurance Expense using Accrual Basis * Cash Basis Accrual Basis ** Cash Basis Dec. 31, 2003 $11,700 $0 2003 $ 4,500 $16,200 Dec. 31, 2004 6,300 0 2004 5,400 0 Dec. 31, 2005 900 0 2005 5,400 0 Dec. 31, 2006 0 0 2006 900 Total $16,200 $16,200 EXPLANATIONS: * Accrual asset balance equals months left in the policy x $450 per month (monthly cost is computed as $450, from $16,200 divided by 36 months). Months Left Balance 12/31/2003 26 $11,700 12/31/2004 14 6,300 12/31/2005 2 900 12/31/2006 ** Accrual insurance expense equals months covered in the year x $450 per month. Months Covered Expense 2003 10 $ 4,500 2004 12 5,400 2005 12 5,400 2006 2 900 $16,200...
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This note was uploaded on 10/17/2011 for the course ACC 225 acc 225 taught by Professor Unknown during the Spring '10 term at University of Phoenix.

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ACC 225 WEEK 3 CHECKPOINT - ADJUSTMENTS AND ACCRUAL AND CASH BASIS ACCOUNTING

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