Adjusting the Accounts

Answer

Under the Cash Basis statements, companies record revenue when they receive cash. They record an expense when they pay out cash. The cash basis seems appealing due to its simplicity, but it often produces misleading financial statements. It fails to record revenues when companies performed services but not received cash. For this reason expenses does not match with revenues.

Under the Accrual basis financial statements, companies record transactions that change a company's financial statements in the periods in which the events occur. It determines net income that means companies recognize revenues when they performed the services(rather than when they receive cash) and the expenses(rather than when they pay cash) for a particular period. So that accrual basis financial statements provide more usual information than cash-basis statements

Problems: Adjusting the Accounts

Problem-1: Adjusting the Accounts

Logan Krause started her own consulting firm, Krause Consulting, on May 1, 2019. The trial balance at May 31 is as follows. Krause ConsultingTrial BalanceMay 31, 2019 In addition to...

Problem-2: Adjusting the Accounts

Mac's Motel opened for business on May 1, 2019. Its trial balance before adjustment on May 31 is as follows. MAC'S MOTELTrial BalanceMay 31, 2019 In addition to those accounts...

Problem-3: Adjusting the Accounts

Alena Co. was organized on July 1, 2019. quarterly financial statements are prepared. The unadjusted and adjusted trial balances as of September 30 are shown bellow ALENA CO.Trial BalanceSeptember 30,...

Problem-4: Adjusting the Accounts

A review of the ledger of Remina Company at December 31, 2019, produces the following data pertaining to the preparation of annual adjusting entries.

Problem-5: Adjusting the Accounts

On Nobember 1, 2019, the account balances of Hamm Equipment Repair were as follows

Problem-6: Adjusting the Accounts

Johnson Graphics Company was organized on January 1, 2019, by Cameron Johnson. At the end of the first 6 months of operations, the trial balance contained the accounts shown as...

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