For each of the following situations write the principle, assumption, or concept that justifies or explains what occurred. A. A landscaper received a customer’s order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year. B. A company divides its income statements into four quarters for the year. C. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000. D. Brandy’s Flower Shop is forecasting its balance sheet for the next five years. E. When preparing financials for a company, the owner makes sure that the expense transactions are kept separate from expenses of the other company that he owns. F. A company records the expenses incurred to generate the revenues reported.
For each of the following situations write the principle, assumption, or concept that justifies or explains what occurred. A. A landscaper received a customer’s order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year. B. A company divides its income statements into four quarters for the year. C. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000. D. Brandy’s Flower Shop is forecasting its balance sheet for the next five years. E. When preparing financials for a company, the owner makes sure that the expense transactions are kept separate from expenses of the other company that he owns. F. A company records the expenses incurred to generate the revenues reported.
For each of the following situations write the principle, assumption, or concept that justifies or explains what occurred.
A. A landscaper received a customer’s order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year.
B. A company divides its income statements into four quarters for the year.
C. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000.
D. Brandy’s Flower Shop is forecasting its balance sheet for the next five years.
E. When preparing financials for a company, the owner makes sure that the expense transactions are kept separate from expenses of the other company that he owns.
F. A company records the expenses incurred to generate the revenues reported.
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
The following items were selected from among the transactions completed by Sherwood Co. during the current year:Required:1. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. Round your answers to the nearest dollar.2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles):a. Product warranty cost, $29,000.b. Interest on the nine remaining notes owed to Greenwood Co. Assume a 360-day year.
A company determines supplies expense for each year by keeping a record of all supplies purchased during the year, and counting the amount of supplies on hand at the end of the year to determine the amount of supplies used during the year. On December 31, Year 1, the employee in charge of counting the supplies accidentally double‐counted $400 worth of supplies. Based on this error, what will be wrong with the reported amount of “Supplies” asset on the December 31, Year 1 balance sheet? What will be wrong with the “Supplies Expense” amount shown on the income statement for the year ended December 31, Year 1? For both of these numbers, tell me whether the number will be overstated or understated, and by how much.
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