Posted: October 10th, 2024

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Question description

Homework Week 3

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Individual
Exercise 2

Resource: Ch. 4 of Financial Accounting
Complete Exercise BE4-1.
Complete Problems 4-2A & 4-3A. 
Answer the following:
· 
Commercial
accounting and generally accepted accounting principles, generally prescribe
the accrual basis of accounting over the cash basis.
· 
Describe
both bases of accounting and explain the differences.
Submit as either a Microsoft® Excel® or Microsoft®
Word document

Brief Exercises

BE4-1 Transactions that affect earnings do not necessarily affect cash.
Identify the effect,
if any, that each of the following transactions would have upon cash
and net income.
The first transaction has been completed as an example.
Net
 
Cash  Income
(a) Purchased $100 of supplies for cash.  -$100   $ 0
(b) Recorded an adjusting entry to record use of $20 of the above
supplies.
(c) Made sales of $1,300, all on account.
(d) Received $800 from customers in payment of their accounts.
(e) Purchased equipment for cash, $2,500.
(f) Recorded depreciation of building for period used, $600.

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BE4-2 The ledger of Hubbard Company includes the following accounts.
Explain why
each account may require adjustment.
(a) Prepaid Insurance.
(b) Depreciation Expense.
(c) Unearned Service Revenue.
(d) Interest Payable.

BE4-3 Dicker Company accumulates the following adjustment data at December
31.
Indicate (1) the type of adjustment (prepaid expense, accrued
revenue, and so on) and
(2) the status of the accounts before adjustment (overstated or
understated).
(a) Supplies of $400 are on hand. Supplies account shows $1,600
balance.
(b) Service Revenue earned but unbilled total $700.
(c) Interest of $300 has accumulated on a note payable.
(d) Rent collected in advance totaling $1,100 has been earned.

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