The Entry of the Accounts - Revenue Recognition Principles - Different Types of Adjustment Entries - Accounting and Finance Assignment Help

Assignment Task

PART 1
This part consists of the questions relevant to the rules and concepts followed for the entry of the accounts.
1. Write a note on the following

a. Dual concept
b. Matching concept
c. Revenue recognition principles
d. Full disclosure
e. Accrual accounting
f. Different types of adjustment entries
g. Prepaid expenses
h. Accrued expenses
i. Unearned revenues

PART 2
This part consists of the questions relevant to the different types of adjustments in the trial balance
1. Identify the impact on the balance sheet if the following information is not used to adjust the accounts.
A. Supplies consumed totaled $2,750.
B. Interest accrues on notes payable at the rate of $180 per month.
C. Insurance of $470 expired during the month.
D. Plant and equipment are depreciated at the rate of $1,450 per month.

2.For each of the following oversights, state whether total assets will be understated (U), overstated (O), or no effect (NA).
Options:
a. Failure to record revenue recognized but not yet received. 
b. Failure to record expired prepaid rent.
c. Failure to record accrued interest on the bank savings account.
d. Failure to record depreciation.
e. Failure to record accrued wages.
f. Failure to record the recognized portion of unearned revenues.

3. Blue Guitar Music School borrowed $30,000 from the bank signing an 8%, 6-month note on November 1. Principal and interest are payable to the bank on May 1. If the company prepares monthly financial statements, what adjusting entry should the company make on November 30 with regard to the note (round answer to the nearest dollar)?

4. Presented below are the basic assumptions and principles underlying financial statements.

a. Historical cost principle
b. Economic entity assumption
c. Full disclosure principled
d. Going concern assumption
e. Monetary unit assumption
f. Periodicity assumption

Identify the basic assumption or principle that is described below.

1. The economic life of a business can be divided into artificial time periods.
2. The business will continue in operation long enough to carry out its existing objectives.
3. Assets should be recorded at their cost.
4. Economic events can be identified with a particular unit of accountability.
5. Circumstances and events that make a difference to financial statement users should be disclosed.
6. Only transaction data that can be expressed in terms of money should be included in the accounting records.

5.Indicate (a) the type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense), and (b) the accounts before adjustment (overstated or understated) for each of the following:
1. Supplies of $400 have been used. 
2. Salaries of $300 are unpaid. 
3. Rent received in advance totaling $500 has been earned. 
4. Services provided but not recorded total $700.

6. Buena Vista Social Club accumulates the following adjustment data on December 31.
1. Revenue of $1,600 collected in advance has been recognized.
2. Salaries of $600 are unpaid.
3. Prepaid rent totaling $500 has expired.
4. Supplies of $450 have been used.
5. Revenue recognized but unbilled total $750.
6. Utility expenses of $250 are unpaid.
7. The interest of $300 has accrued on a note payable.

Instructions:
1. The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense).

2. The following details are available for Sherlock Holmes on March 3, 2006. With the additional information given prepare the adjusting entries
a. Prepare the adjusted trial balance
b. Balance sheet
c. Income statement