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Week 3 Exercises

FA, Chap3 dubiousness 2: State deuce mainly accepted accounting relate to adjusting the accounts.

Two generally accepted accounting principles that relate to adjusting the accounts are receipts recognition principle and the matching principle.

FA, Chap3 Question 3: Rick Marsh, a lawyer, accepts a legal engagement in March,
performs the work in April, and is paid in May. If Marshs law self-coloured prepares monthly financial statements, when should it recognize revenue from this engagement? why?

The lawyer should recognize the revenue in April. But consort to the revenue recognition principle, Marshs firm should engender recognized the revenue when the service was performed, not when the firm was paid.

FA, Chap3 Question 4: Why do accrual-basis financial statements provides more
useful tuition than cash-basis statements?

The accrual basis provides more info because it matches revenues with disbursals during a proper(postnominal) accounting period. The revenue includes run that have been performed but not yet paid for. Basically, meaning the receivables are more dead-on(prenominal) than cash basis accounting. Additionally, expenses that were incurred during that time period are to a fault included even though they have yet to be paid.





FA, Chap3 Question 8: Distinguish between the two categories of adjusting
entries, and severalise the types of adjustments applicable to each category.

When it comes to deferrals they are either prepaid expenses or unearned revenues. Adjustments are made for deferrals to record the portion that represents either the expense incurred or the revenue earned. An adjustment for prepaid expenses increases an expense and decreases an asset account. An adjustment for unearned revenue increases a revenue account and decreases a liability account. Accruals are either increase revenues or accrued expenses. Adjustments are made for accruals to record revenues from services performed that have yet to be collected. An adjustment for...If you want to build a full essay, order it on our website: Orderessay



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