11:04< ВackWeek 6 HW.docxQ1. The balance in the unearned rent account for Jones Co. as ofDecember 31 is $1,200. If Jones Co. failed to record theadjusting entry for $600 of rent earned during December, theeffect on the balance sheet and income statement for Decemberwould be:A. Assets understated by $600; net income overstated by$600.B. Liabilities understated by $600; net income understated by$600.C. Liabilities overstated by $600; net income understated by$600.D. Liabilities overstated by $600; net income overstated by$600.Q2. Would AT&T (T) and Microsoft (MSFT) use the cash basisor the accrual basis of accounting? Explain.Q3. Why are adjustments needed at the end of an accountingperiod?Q4. Describe the nature of the assets that compose the followingsections of a balance sheet:a. BalanceSheet:b. Property, Plant, andEquipment:1200000DashboardCalendarTo DoNotificationsInbox

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Q1. The balance in the unearned rent account for Jones Co. as of December 31 is $1,200. If Jones Co. failed to record the adjusting entry for $600 of rent earned during December, the effect on the balance sheet and income statement for December would be:

Q1. The balance in the unearned rent account for Jones Co. as of December 31 is $1,200. If Jones Co. failed to record the adjusting entry for $600 of rent earned during December, the effect on the balance sheet and income statement for December would be:

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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11:04
< Вack
Week 6 HW.docx
Q1. The balance in the unearned rent account for Jones Co. as of
December 31 is $1,200. If Jones Co. failed to record the
adjusting entry for $600 of rent earned during December, the
effect on the balance sheet and income statement for December
would be:
A. Assets understated by $600; net income overstated by
$600.
B. Liabilities understated by $600; net income understated by
$600.
C. Liabilities overstated by $600; net income understated by
$600.
D. Liabilities overstated by $600; net income overstated by
$600.
Q2. Would AT&T (T) and Microsoft (MSFT) use the cash basis
or the accrual basis of accounting? Explain.
Q3. Why are adjustments needed at the end of an accounting
period?
Q4. Describe the nature of the assets that compose the following
sections of a balance sheet:
a. Balance
Sheet:
b. Property, Plant, and
Equipment:
12
000
00
Dashboard
Calendar
To Do
Notifications
Inbox

Expert Solution

Step 1

Unearned rent is the amount of revenue received in advance. It is in the nature of liability. The amount which is earned is adjusted against it using adjustment entry.

We given in the question that,

Unearned revenue account shows the balance of $1,200.

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The balance in the unearned rent account for Jones Co. as of December 31 is $1,200. If Jones Co. failed to record the adjusting entry for $600 of rent earned during December, the effect on the balance sheet and income statement for December would be: A. Assets understated by $600; net income overstated by $600. B. Liabilities understated by $600; net income understated by $600. C. Liabilities overstated by $600; net income understated by $600. D. Liabilities overstated by $600; net income overstated by $600.
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