1. A building owned by Hopewell Company was recently valued at $850,000 by a real estate expert....

Question:

1. A building owned by Hopewell Company was recently valued at $850,000 by a real estate expert. The president of the company is questioning the accuracy of the firm's latest balance sheet because it shows a book value of $550,000 for the building. How would you explain this situation to the president?

2. At the beginning of the year, Mandela Company purchased a new building and some expensive new machinery. An officer of the firm has asked you whether this purchase will affect the firm's year-end income statement. What answer would you give?

3. Suppose the president of a company where you work as an accountant questions whether it is worthwhile for you to spend time making adjustments at the end of each accounting period. How would you explain the value of the adjustments?

4. How does the worksheet help provide vital information to management?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...