please show the step to solutions as possible as you can 27. Under the accrual b
ID: 2540821 • Letter: P
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please show the step to solutions as possible as you can
27. Under the accrual basis of accounting a. cash ust be received before revenue is recognized. b. net income is calculated by matching cash outflows against cash inflows. c. events that change a company's financial statements are recognized in the period they occu rather than in the period in which cash is paid or received. d the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles. 28. Which statement is correct? a. As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use. b. The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles. c. The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received. d. As long as management is ethical, there are no problems with using the cash basis of accounting. 29. La More Company had the following transactions during 2013 . Sales of $4,500 on account Collected $2,000 for services to be performed in 2014 Paid $1,875 cash in salaries for 2013 Purchased airline tickets for $250 in December for a trip to take place in 2014 What is La More's 2013 net income using accrual accounting? a. $2,875 b· $4,875 c. $4,625 d. $2,625 30. Adjusting entries are required: because some costs expire with the passage of time and have not yet been journalized. a. b. when the company's profits are below the budget. c. when expenses are recorded in the period in which they are earned. d. None of these answer choices are correct. 31. An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future. No entry was made at the time the service was provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause a. revenues to be overstated. b. net income to be overstated. c. liabilities to be understated. d. revenues to be understatedExplanation / Answer
27. (c) events that changes a company's financial statement are recognized in the period they occur rather in the period in which cash is paid or received.
28. (b) the use of the cash basis of accounting violates both the revenue recognization and expenses recognization principles.
29. (d) $2625
30. (a) because some cost expired with passage of time and have not yet been journalized.
31. (d) revenues to be understated
32. (c) debit rent expenses $3000, nd credit prepaid rent $3000.
33. (d) contra asset account
34. (b) debit depreciation expense $150, credit accumulated depreciation $150
35. (d) debit supplies expense for $120
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