ACC349s.Wk2.indtestexercises - E2-7 (a) This entry violates...

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Unformatted text preview: E2-7 (a) This entry violates the economic entity assumption. The company made a mistake by charging this cost to the wrong economic body. (b) Revenue should be recognized when it is earned. An earnings process has not taken place here. (c) The company is too traditional in its accounting. It is uncertain that the company will have to pay. (d) It is misleading to stray from the cost principle. (e) It is inappropriate to accept liquidation in this instance. (f) Revenue should be recognized when it is earned. An earnings process has not taken place here. E3-5 Depreciation Expense ($250 X 3) 750 Accumulated Depreciation—Equipment Unearned Rent Revenue ($9,300 X 1/3) 750 3,100 Rent Revenue Interest Expense 3,100 500 Interest Payable Supplies Expense 500 1,950 Supplies ($2,800 – $850) Insurance Expense ($300 X 3) 1,950 900 Prepaid Insurance 900 ...
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This note was uploaded on 01/01/2012 for the course ACCOUNTING Intermedia taught by Professor Varied during the Spring '11 term at University of Science and Arts of Oklahoma.

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ACC349s.Wk2.indtestexercises - E2-7 (a) This entry violates...

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