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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.
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.)
- An insurance policy for two years was acquired on April 1, 2010 for $8,000.
- 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:
-
- an income statement.
- a retained earnings statement.
- 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.
- What is the accrual basis of accounting?
- What is an accrued expense?
- What is accrued revenue?
- What is a prepaid expense?
- What is unearned revenue?
- State the rule that indicates which adjusting entries for prepaid and unearned items should be reversed.
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