《financial Accouning, 9e财务会计 Warren》ch03.pptVIP

Cash Basis of Accounting Accrual Basis of Accounting Revenue reported when earned Expense reported when incurred Properly matches revenues and expenses in determining net income Requires adjusting entries at end of period Accrued Revenues Accrued Expenses NetSolutions Trial Balance December 31, 2005 Cash 2 065 00 Accounts Receivable 2 220 00 Supplies 2 000 00 Prepaid Insurance 2 400 00 Land 20 000 00 Office Equipment 1 800 00 Accounts Payable 900 00 Unearned Rent 360 00 Chris Clark, Capital 25 000 00 Chris Clark, Drawing 4 000 00 Fees Earned 16 340 00 Wages Expense 4 275 00 Rent Expense 1 600 00 Utilities Expense 985 00 Supplies Expense 800 00 Miscellaneous Expense 455 00 42 600 00 42 600 00 NetSolutions provided $500 in services during December for which the customer has not been billed. 29 13 14 15 16 31 Accounts Receivable 500 00 Fees Earned 500 00 Dec. 31 500 Dec. 31 500 12 41 Accounts Receivable Bal. 16,340 Fees Earned 12 41 Bal. 2,220 2,720 16,840 Effect of Omitting Adjustment Fixed Assets Land Land has an infinite life; therefore, it does not depreciate. * * Chapter 3 The Matching Concept and the Adjusting Process Accounting, 21st Edition Warren Reeve Fess PowerPoint Presentation by Douglas CloudProfessor Emeritus of AccountingPepperdine University ? Copyright 2004 South-Western, a division of Thomson Learning. All rights reserved. Task Force Image Gallery clip art included in this electronic presentation is used with the permission of NVTech Inc. Some of the action has been automated, so click the mouse when you see this lightning bolt in the lower right-hand corner of the screen. You can point and click anywhere on the screen. 1. Explain how the matching concept relates to the accrual basis of accounting. 2. Explain why adjustments are necessary and list the characteristics of adjusting entries. 3. Journalize entries for accounts requiring adjustment. 4. Summarize the adjustment process and prepare an