Adjusting entries : Adjusting entries are the journal entries , which are recorded at the end of the accounting period to correct or adjust the revenue and expense accounts, to concede with the accrual principle of accounting. Accounting rules for journal/adjusting entries : To record increase balance of account : Debit assets, expenses, losses and credit liabilities, capital, revenue and gains. To record decrease balance of account : Credit assets, expenses, losses and debit liabilities, capital, revenue and gains. Net Income : The net income refers to that part of income on which the profit of the company is calculated. The net income is the total earnings of the company and it is derived after subtracting all the expense and taxes from the income. The net income can be expressed as follows: Net income = Revenues – Expenses To Determine: Whether the assets, liabilities, and shareholder’s equity would be higher or lower and its respective amount as on December 31, 2016, if none of the prepared adjusting journal entries were recorded.

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Chapter 2, Problem 2.8BE

To determine

Adjusting entries:

Adjusting entries are the journal entries, which are recorded at the end of the accounting period to correct or adjust the revenue and expense accounts, to concede with the accrual principle of accounting.

Accounting rules for journal/adjusting entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.

To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Net Income:

The net income refers to that part of income on which the profit of the company is calculated. The net income is the total earnings of the company and it is derived after subtracting all the expense and taxes from the income.

The net income can be expressed as follows:

Net income = Revenues – Expenses

To Determine: Whether the assets, liabilities, and shareholder’s equity would be higher or lower and its respective amount as on December 31, 2016, if none of the prepared adjusting journal entries were recorded.

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