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Prepare written answers to the following assignments from Chapter 3 of the text, Financial Accounting 6th ed:
a. Questions 2, 3, 4 and 8
2. State two generally accepted accounting principles that relate to adjusting the accounts.
Two generally accepted accounting principles are revenue recognition principle and matching principle.
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
It should recognize the revenue in April when the service is being rendered in accordance to the revenue
4. Why do accrual-basis financial statements provide more useful information than cash-basis statements?
Accrual-basis financial statements provide more useful information than cash-basis statements because
it records the revenue that a company has earned in that accounting period and also match the expenses
with earned revenues.
8. Distinguish between the two categories of adjusting entries, and identify the types of ...
This solution is comprised of a detailed explanation to state two generally accepted accounting principles that relate to adjusting the accounts.