Adjustments for Financial Reporting - nosneb - 78304

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  • From: Business, Accounting
  • Due on: Sun 31 Jan, 2016 (09:00am)
  • Asked on: Fri 29 Jan, 2016
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Description

Respond to the following questions or problems using grammatically correct language and appropriate APA citations. To achieve a proficient grade in this assignment, answer the proficient-level queries for each question. To achieve a distinguished grade, answer both sets of queries for each question.

  1. Question 1:
     
    • Proficient:
      • Describe the basic characteristics of the cash basis and the accrual basis of accounting.
      • How are revenues and expenses reported on the income statement under the cash basis of accounting and the accrual basis of accounting?
    • Distinguished:
      • What differences exist when assets, liabilities, and equities are recorded under each of the two bases of accounting?


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  2. Question 2:
     
    • Proficient:
      • Which events during an accounting period trigger the recording of normal journal entries and which event triggers the making of adjusting entries? Please explain why adjusting entries are necessary at the end of an accounting period.
    • Distinguished:
      • Identify the four different types of adjusting entries frequently required at the end of an accounting period.


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  3. Question 3:
     
    • Proficient:
      • Give an example of an adjusting journal entry for each of the following transactions. Provide three correct responses:
        • Equal growth of an expense and a liability.
        • Earning of revenue that was previously recorded as unearned revenue.
        • Equal growth of an asset and revenue.
        • Increase in an expense and decrease in an asset.
    • Distinguished:
      • Give an example of an adjusting journal entry for each of the transactions. Provide four correct responses.


      •  
  4. Question 4:
     
    • Proficient:
      • Classify the following items as (a) prepaid expense, (b) unearned revenue, (c) accrued revenue, or (d) accrued expense. Provide six or seven correct responses:
        • A three-year premium paid on a fire insurance policy.
        • Fees earned but not yet received.
        • Fees received but not yet earned.
        • Salary owed but not yet paid.
        • Subscriptions received in advance by a magazine publisher.
        • Supplies on hand at the end of an accounting period.
        • Taxes owed but payable in the following accounting period.
        • Utilities owed but not yet paid.
    • Distinguished:
      • Classify the items mentioned as (a) prepaid expense, (b) unearned revenue, (c) accrued revenue, or (d) accrued expense. Provide eight correct responses.


      •  
  5. Question 5:
     
    • Proficient:
      • Describe the difference between depreciation expense and accumulated depreciation.
      • Describe the formula used for computing the straight line depreciation for a depreciable asset. Explain how to calculate an asset's book value.
    • Distinguished:
      • The balance in the equipment account is $1,375,000, and the balance in the accumulated depreciation—equipment account is $725,000.
      • What is the book value of the equipment and does that amount mean that the equipment has a loss in real value of $725,000? Explain your response.

 

Information relating to Assignment:

You will observe that a Proficient-level question is asked ... and is then followed by a Distinguished-level question. These two questions are companion questions. After responding to the Proficient-level and Distinguished-level for the first question, respond to the next set of Proficient-level and Distinguished-level questions. Repeat this process until all questions have been responded at both the Proficient-level and Distinguished-level.

Assignment Hints/Suggestions: The assignment is an introduction to the adjustments required relating to financial reporting. This assignment will familiarize you with the various concepts relating to adjusting entries. Here are some hints and suggestions for certain questions in this assignment:  

Question 1: In the Distinguished-level question, you are asked "What differences exist when assets, liabilities, and equities are recorded under each of the two bases of accounting." Feel free to respond this question, or, you may respond to the following Alternative Distinguished-level question: "Why is the cash basis considered theoretically  unacceptable?" You only need to respond to one of the two distinguished questions.

Question 2: In the first part of the Proficient-level question, you are asked "Which events during an accounting period trigger the recording of normal journal entries ... " Here is a correct response for the first part of this question ...  that you may use: "The events triggering normal journal entries are the normal, daily occurrences relating to operating the business, such as: making sales or performing services, buying things, paying salaries, incurring other expenses, etc." Complete the remaining part of this question by responding to which events triggers the making of adjusting entries and explain why adjusting entries are necessary at the end of an accounting  period.

Question 3: Here is the correct response to the first item listed, that serves as an example of an acceptable response (feel free to use this response and respond to the other listed items similarly):

1) Equal growth of an expense and a liability: Accrue salary expense: Dr Salary exp.    Cr Salaries Payable

Question 4: Here is the correct response to the first item listed, that serves as an example of an acceptable response (feel free to use this response and respond to the other listed items similarly):

1) Prepaid Expense:        A three-year premium paid on a fire insurance policy

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