Posted: April 14th, 2016

Adjustment entries involve revenue or expense accounts but never affect the cash account.?

Requirement 3
Using an accounting worksheet, Jones prepares a trial balance before making adjustments. Compute the worksheet,
showing the adjustments, and compute the ending (adjusted) balance amounts. Label each adjustment in parenthesis (i) – (l).

Requirement 4
Prepare an income statement, a statement of owners’ equity, and a balance sheet for Jake’s Computer Repair Service for the months ended February 28, 20x!. Use the adjusted trial balance amounts you computed in Requirement 3, and the template below.

Requirement 5
Jones recognizes utilities expense as soon as the utilities bill arrives, and recognizes service revenues only when the related service is performed (refer back to transaction c and e in Requirement (4). Which basis of accounting is Jones correctly applying?

Requirement 6
Jones makes adjustments at month-end to assign revenues to the period in which they were earned and to assign expenses to the period in which they are incurred. As a result, revenues earned in February are reported together with the expenses incurred to generate those revenues. Which accounting principle or concept is Jones correctly applying?

Requirement 7
Adjustment entries involve revenue or expense accounts but never affect the cash account. True or False?

Requirement 8
Jones accrues interest on the note payable with an adjusting entry. Explain the effect on the income statement if Jones had failed to make this entry.

Requirement 9
True or false? The cash basis of accounting is required under Generally Accepted Accounting Principles (GAAP) when preparing financial statements. Explain, if necessary.