Posted: August 28th, 2016

Explain the effect on the income statement if Jones had failed to make this entry.

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.