MyLab Accounting with Pearson eText -- Access Card -- for Financial Accounting

12th Edition

ISBN: 9780134727677

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Textbook Question

Chapter 3, Problem 3.18AE

Group A

LO 1, 2

(Learning Objectives 1. 2: Explain how accrual accounting differs from cash-basis accounting: apply the revenue and expense recognition principles) During 2018, Able Network. Inc., which designs network servers, earned revenues of $820 million. Expenses totaled $520 million. Able collected an but $20 million of the revenues and paid $610 million on its expenses.

a. Under accrual accounting, what amount of revenue should Able report for 2018? How does the revenue principle help to answer this question?
b. Under accrual accounting, what amount of total expense should Able report for 2018? Which accounting principle helps to answer this question?
c. Redo parts a and b using the cash basis. Explain how the accrual basis differs from the cash basis.
d. Which financial statement reports revenues and expenses? Which statement reports cash receipts and cash payments?

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Chapter 3, Problem 3.17S

Chapter 3, Problem 3.19AE

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Chapter 3 Solutions

MyLab Accounting with Pearson eText -- Access Card -- for Financial Accounting

Ch. 3 - If Oxbow Corporation dees not record a sale mace...Ch. 3 - Which of the following transactions would be...Ch. 3 - A physician performs medical services for a...Ch. 3 - The Animal Adventure zoo gift shop sells stuffed...Ch. 3 - According to U S GAAP, when should revenue be...Ch. 3 - Prob. 6QC Ch. 3 - Prob. 7QC Ch. 3 - Prob. 8QC Ch. 3 - What data flows from the statement of retained...Ch. 3 - Which financial statement reports assets,...

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Solution Summary: The author explains revenue recognition principle, which states that every business organization should recognize the revenue when it is earned, no matter, cash related to that obligation is received or not.

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