Carlos Companys accountant makes the assumptions or performs the activities listed below. Tell which of the following
Question:
(a) Periodicity,
(b) Continuity,
(c) Accrual accounting,
(d) Revenue recognition,
(e) Deferral,
(f) Accrual.
1. Recognizes the usefulness of financial statements prepared on a monthly basis even though they are based on estimates.
2. Prepares an income statement that shows the revenues earned and the expenses incurred during the accounting period.
3. In estimating the life of a building, assumes that the business will last indefinitely.
4. Postpones the recognition of a one-year insurance policy as an expense by initially recording the expenditure as an asset.
5. Records a sale when the customer is billed.
6. Recognizes, by making an adjusting entry, wages expense that has been incurred but not yet recorded.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
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