Concept Introduction:
Journal entries:
The business runs with the transactions it makes. Every transaction results in some outcome like the creation of an asset, liability, income, loss, gain, or expense. The transactions are recorded based on the resulting outcome. The debits and the credits are made based on the rules of accounting.
To prepare: December 31 year-end adjusting entry for estimated future sales returns and allowances (revenue side).
Concept Introduction:
Journal entries:
The business runs with the transactions it makes. Every transaction results in some outcome like the creation of an asset, liability, income, loss, gain, or expense. The transactions are recorded based on the resulting outcome. The debits and the credits are made based on the rules of accounting.
Adjusting entries: Adjusting entries are prepared to complete the financial statement of the company and to reflect the accrual method of accounting. Adjusting entries are prepared before the issuance of the financial statement.
To prepare: December 31 year-end adjusting entry for estimated future inventory returns and allowances (cost side).
Concept Introduction:
Journal entries:
The business runs with the transactions it makes. Every transaction results in some outcome like the creation of an asset, liability, income, loss, gain, or expense. The transactions are recorded based on the resulting outcome. The debits and the credits are made based on the rules of accounting.
Adjusting entries: Adjusting entries are prepared to complete the financial statement of the company and to reflect the accrual method of accounting. Adjusting entries are prepared before the issuance of the financial statement.
To prepare: Journal entry to record merchandise returned on January 3
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- 95 Conceptual Framework Information that is capable of making a difference in the decisions made by users has this qualitative characteristic. a. Relevance b. Faithful representation 2. c. Timeliness d. Verifiability 3. When making materiality judgments, the overriding consideration is a. the ability of the item being judged to influence users' decisions. b. the size of the impact of the item being judged. the characteristics of the item being judged. C. d. cand d 4. This qualitative characteristic is unique in the sense that it necessarily requires at least two items. a. Verifiability b. Faithful representation c. Timeliness d. Comparability 5. Which of the following enhances the comparability of information? a. Making unlike things look alike. b. Making like things look different. c. Using different methods to account for similar transactions from period to period. d. Consistent application of accounting policies from period to period. 6. Information has this qualitative…arrow_forwardQUESTION 49 Match the statements below with the accounting assumption, characteristic, or principle to which the statement relates. Assumptions/characteristics/principles may be used once, more than once, or not at all. V Recorded when the performance obligation is satisfied. a. Revenue recognition principle V The reason for recording accruals and deferrals in adjusting entries. b. Matching principle Valuing assets at amounts originally paid for them. C. Historical cost principle d. Entity assumed to have a long life Going concern assumption Description of significant accounting policies and unusual events. e. Full disclosure principle f. Information has predictive and confirmatory value. Relevance characteristic 8. Consistency characteristicarrow_forwardIdentify the order of the five steps in the revenue recognition process. BE3.1 (LO 1), K Number the following steps of the revenue recognition process (from 1-5) to place in the correct order. a. Allocate the transaction price to the separate performance obligations. Identify the contract with customers. b. Identify the separate performance obligations in the contract. Recognize revenue when each performance obligation is satisfied. Determine the transaction price. C. d. e. Identify impact of transactions on cash and net income.arrow_forward
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