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Homework answers / question archive /   Saudi Electronic University - ACCT 201 FINANCIAL ACCOUNTING ACCT 201 ASSIGNMENT 2 Q 1) Contrast the cash basis of accounting with the accrual basis of accounting

  Saudi Electronic University - ACCT 201 FINANCIAL ACCOUNTING ACCT 201 ASSIGNMENT 2 Q 1) Contrast the cash basis of accounting with the accrual basis of accounting

Accounting

 

Saudi Electronic University - ACCT 201

FINANCIAL ACCOUNTING ACCT 201

ASSIGNMENT 2

Q 1) Contrast the cash basis of accounting with the accrual basis of accounting.

Q 2.  Record the following transactions of Reed Co. in the desired manner and give the adjusting entry on December 31, 2010. (Two entries for each part.)

  1. An insurance policy for two years was acquired on April 1, 2010 for $8,000.
  2. Rent of $12,000 for six months for a portion of the building was received on November 1, 2010.

Q 3The adjusted trial balance of Ryan Financial Planners appears below. Using the information from the adjusted trial balance, you are to prepare for the month ending December 31:

 

 

    1. an income statement.      
    2. a retained earnings statement.
    3. a statement of financial position.

 

RYAN FINANCIAL PLANNERS

 

Adjusted Trial Balance December 31, 2012

Debit                  Credit

 

Cash

     $4,400

Accounts Receivable..........................................................................

2,200

 

Office Supplies...................................................................................

1,800

 

Office Equipment...............................................................................

15,000

 

Accumulated Depreciation—Office Equipment................................

 

$4,000

Accounts Payable...............................................................................

 

3,800

Unearned Revenue.............................................................................

 

5,000

Share Capital–Ordinary.....................................................................

 

10,000

Retained Earnings (1 Dec).................................................................

 

4,400

Dividends ..........................................................................................

2,500

 

Service Revenue.................................................................................

 

3,700

Office Supplies Expense....................................................................

600

 

Depreciation Expense........................................................................

2,500

 

Rent Expense.....................................................................................

    1,900

            

 

$30,900

$30,900
       

Q 4 Provide clear, concise answers for the following.

 

  1. What is the accrual basis of accounting?
  2. What is an accrued expense?
  3. What is accrued revenue?
  4. What is a prepaid expense?
  5. What is unearned revenue?
  6. State the rule that indicates which adjusting entries for prepaid and unearned items should be reversed.

 

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