Chapter 2, Problem 2.12P

1.

To determine

Accrual basis accounting:

According to this basis of accounting, revenue should be recognized at the time when it is earned, irrespective of whether the cash received or not, and expense should be recognized at the time when it is incurred, irrespective of whether it is paid or not.

Income statement:

This is the financial statement of a company which shows all the revenues earned and expenses incurred by the company over a period of time. It is prepared to find out the net income of an organization.

Balance sheet:

Balance sheet is a financial position statement which represents all the assets, liabilities, and stockholders’ equity of a concern on a particular date. The balance sheet displays that on a particular date all the assets of a concern must be equal to the sum of liabilities and stockholders’ equity.

To Prepare: An accrual basis income statement for the year 2016.

2) a.

To determine

The following balance sheet amounts on December 31, 2016.

2) b.

To determine

The following balance sheet amounts on December 31, 2016.

2) c.

To determine

The following balance sheet amounts on December 31, 2016.

2) d.

To determine

The following balance sheet amounts on December 31, 2016.