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financial accounting quiz 3

financial accounting quiz 3 - Financial Accounting Quiz...

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Financial Accounting Quiz - Spring 2008 Names: Page 1 1. A law firm received $2,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause a. expenses to be overstated. b. net income to be overstated. c. liabilities to be understated. d. revenues to be understated. 2. Farr Company sells merchandise on account for $1,000 to Taylor Company with credit terms of 2/10, n/30. Taylor Company returns $300 of merchandise that was damaged, along with a check to settle the account within the discount period. The amount of the check from Taylor will be: 3. During 2007, Leslie Browne, attorney at law, billed clients $400,000 for legal services she had rendered during the year. Of this amount, $50,000 was still unpaid at the end of the year. During 2007, Leslie received $20,000 from clients in payment of their accounts receivable balances as of January 1, 2007, and an additional $10,000 in retainers for services that Leslie would provide during 2008. How much revenue should Leslie report for 2007 under the cash basis and accrual basis, respectively? Cash basis Accrual basis
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