State whether the transaction would increase revenues, decrease revenues, increa

Question

State whether the transaction would increase revenues, decrease revenues, increase expenses, decrease expenses, or have no effect on revenues or expenses, and compute August net income or net loss under the accrual basis of accounting.

Caroina, Carp, compleled the folkawing selected transactians and prepared these adjusting entries during August (Click the icon to view the transactions ) Read the requiraments Requirement1. Stata whether the transaction would increase ravnues, decrease revenuss, increase axpenses, decraase expenses, or have no effect on revenues or expanses. If ravanues or expenses ara affacted, give the amount of the impact on revenues or expenses for August. (Round amounts to the nearest dollar. Enter 0 for any transactions that do not affect revenues or expenses. Use parentheses or a minus sign for a decrease In revenues or a decrease In expenses.) Revenues and Expenses for August Date Impact on Revenues or Expenses s Effect on Revenues or Expenses Aug 1 Aug 3 Aug 6 Aug 8 Aug 12 Aug 18 Aug 23 Aug 26 Aug 30 Aug 31 Requirem 2. CamputAugust net income or net lass under the accrual basis of accounting (Use parentheses ar a minus sign far a rnel loss) August net income loss) under the accrual basis of accounting is 3 Requirement 3. State why the accrual basis of accounting resuits in an accurate measurement of income Accrual basis accounting results in an accurate measure of income because it records revenues | and matches the expenses incurred to produce that revenue by recording expenses Because of this, accrual basis accounting provides more complete reports of

Explanation / Answer

Revenues and expenses for august Date Impact on revenues or expenses $ effect on revenues or expenses Aug. 1 No effect 0 Aug. 3 Increase in revenue 2200 Aug. 6 No effect 0 Aug. 8 Increase in expenses 200 Aug. 12 No effect 0 Aug. 18 Increase in revenue 1500 Aug. 23 No effect 0 Aug. 26 No effect 0 Aug. 30 Increase in expenses 2800 Aug. 31 Increase in expenses 500 (1500*1/3) Aug. 31 Increase in revenue 400 Net income/loss: Increase in revenue (2200+1500+400) 4100 Less:Increase in expenses (200+2800+500) 3500 Net income 600

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