W3 Individual Assignment

W3 Individual Assignment - Questions 2 State two generally...

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Questions 2. State two generally accepted accounting principles that relate to adjusting the accounts. 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? 4. Why do accrual-basis financial statements provide more useful information than cash-basis statements? 8. Distinguish between the two categories of adjusting entries, and identify the types of adjustments applicable to each category. Two generally accepted accounting principles that relate to adjusting the accounts are the revenue recognition and matching principles. Under the revenue recognition principle, companies must recognize revenue in the period that it is earned. Under the matching principle, companies must match expenses to revenues. If Marsh's law firm prepares monthly financial statements, they should recognize revenue from this engagement in April. Under the revenue recognition principle, revenue is considered earned when the service is performed. Marsh performs the service in April and therefore, the revenue should be recognized in April. Accrual-basis financial statements provide more useful information than cash-basis
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This note was uploaded on 02/22/2012 for the course ACC 101 taught by Professor Black during the Spring '12 term at University of Phoenix.

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W3 Individual Assignment - Questions 2 State two generally...

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